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Extension of the HMRC Trust Registration Service

Extension of the HMRC Trust Registration Service

As part of the national and international drive to increase transparency between taxpayers and tax authorities, HM Revenue & Customs introduced the Trust Registration Service (TRS). The TRS is designed to serve as a central system within HMRC for collating and recording information about a wide range of trusts and their beneficial owners.

New rules were introduced on 6 October 2020, which extend the scope of the TRS to most UK and certain non-UK trusts, even if the trust has no tax to pay in the UK. However, the new TRS system will not be available until later in 2021, meaning the registration deadline under the new rules will be 10 March 2022.

The new rules also require details of trusts’ beneficial owners and others connected to the trust. This is to allow certain organisations to undertake preventative work to combat money laundering and terrorist financing. This will not be public information, and will only be released on request in limited circumstances.

Does my trust need to register?

Currently, trusts are generally only required to register on the TRS if they become subject to UK tax. However, under the new rules, most trusts with a nexus to the UK are likely to need to register on the TRS, unless they are specifically excluded. Trusts that are required to be registered on the TRS include:

  • All UK ‘express trusts’ (broadly meaning those created deliberately) unless they are specifically excluded;
  • Non-UK express trusts which either:
  • Have at least one UK resident trustee and the trust enters into a ‘business relationship’ with certain UK entities; or
  • Have no UK resident trustees but acquire land or property situated in the UK
  • Discretionary and interest-in-possession trusts.

Very limited types of trust set up for certain purposes may not need to automatically register on the TRS unless they become liable to pay UK tax, including:

  • Pension schemes;
  • Trusts holding life insurance policies or similar;
  • Most charitable trusts;
  • ‘Pilot’ trusts set up before 6 April 2020 for a future use and which hold no more than £100;
  • Trusts created under a will when someone dies, provided they only hold the estate assets for a maximum of two years;
  •  Trusts that are not express trusts (such as those created under the laws of intestacy when someone dies, or trusts imposed by a Court).
What information is provided on the TRS?

The purpose of the TRS is to collect information about the people connected to the trust – primarily the trustees, settlors and beneficiaries. These are collectively known as the ‘beneficial owners’ and the information includes basic personal details.

Knox House Trust UK has a detailed checklist that we use when registering a trust under the TRS, which allows us to collect this information in the most efficient way for our clients.

Will my information be publicly available?

The short answer is: no. Information on the TRS will not be available to the public.

Law enforcement agencies can already obtain information from the TRS to help them in their work against money laundering and terrorist financing. From 10 March 2022, certain other organisations and individuals will also be able to request information from the TRS under specific, limited circumstances:

  • Where a trust enters into a new business relationship with certain UK entities, they will have to show an extract from the TRS to prove they are registered. Relevant ‘obliged entities’ will include organisations such as financial and credit institutions, accountants, tax advisors, lawyers, estate agents and art dealers.
  • Individuals and organisations who have a ‘legitimate interest’ in a particular trust will be required to substantiate why they believe they should have access to information and what it will be used for. This may include where they have suspicion of money laundering or terrorist financing, and can demonstrate to HMRC why they have these suspicions.
  • If a trust has a controlling interest (more than 50% of the shares) in a non-EEA company or other legal entity, certain information may be requested from HMRC where it is relevant to that country or company.

HMRC will not provide information on beneficial owners if they are under 18, lacking mental capacity, or would be put at risk if the information was released (such as from blackmail, extortion, intimidation or violence).

How can Knox House Trust UK help?

When establishing new trusts for our clients, we will always consider the reporting obligations under the TRS. If you are unsure about your TRS registration requirements, or if you are concerned about what information may be shared as part of the TRS, we can also assist. Please don’t hesitate to contact us to discuss your circumstances.