Trust Registration Service in the UK is in force since 2017 as a part of the 4th Money Laundering Directive in which a UK resident and non-UK Resident trust that owns UK assets or has a source of income have to register.
In July 2020, there were significant changes due to transposition in the UK LAW of EU’s 5th Money Laundering Directive which was adopted to tackle funding in criminal & terrorist activities.
Changes that you must aware of in the Trust Registration Service 2021
Already registered trusts will have to share all the mandatory (as per TRS 2020) information about beneficiary owners. Trusts with UK tax liabilities will have huge information to share.
Is it required to register trust?
Yes, all the express trusts in the UK have to register in Trust Registration Service whether the trustees acquire one of the mentioned tax liabilities. On the other hand, Non-UK trusts having UK assets will be mandatory to register but only where they acquire any of the mentioned tax liabilities. Having UK land or property make it mandatory for any non-UK trust to register in TRS.
The guidelines confirm that regardless of the changes, few trusts will remain out of scope due to their low risk. These include
- trusts for helpless beneficiaries or orphaned minors;
- co-ownership trusts (where the trustees and beneficiaries are the same persons)
- Will trusts created on death that only receive assets from the estate (or trusts that only receive benefits from a life insurance policy) which are wound up within 2 years of death.
- New Rules are in effect from 5 Aug 2020.
- New Registration and Additional information deadline 10 March 2022
What information must be provided?
The trust which is in the scope of registration will be required to provide information of each beneficiary owner like Name, residence country, nationality, and the nature and amount of their beneficial interest.
Updating Trust Details
Registered Trustees of trust having UK tax liabilities must inform HMRC about changes in registered information within 30 days whenever they aware of the changes. These changes include
- lead trustee
- other trustees
- protectors or other individuals,
Only Trust which is liable for tax has to report changes. Trusts which are not liable for tax do not have to report any changes. The declaration is mandatory in the trust register if the trust is liable to tax for any year with the associated person’s details.
Penalties for non-compliance
- The penalty rule for non-taxable trusts has not been confirmed. During the discussion process, the following was suggested:
For the offense of failure to register: no penalty, but there will be a notification sent to the trustee.
- For the first offense of the failure to update details within the time limit: no penalty, but there will be a notification sent to the trustee as a reminder of their duties and the time limit.
- For a second and each subsequent offense of a failure to update details within the time limit: a set penalty of £100 per offense.