The New HMRC Trusts Register

A new raft of anti-money laundering rules has important implications for all trusts, and trustees need to be aware of their new obligations.

A new Trusts Register

Individuals and trusts are subject to stringent anti-money laundering laws.

The EU’s Fourth Anti-Money Laundering Directive means the UK has now set up a new Trusts Register managed by HMRC[1].  This Trusts Register will contain “relevant information” for all trusts with UK tax liabilities.  This information will then be available to law enforcement officers in the UK and beyond.

What does the new register mean for trustees?

The register requires specific information about settlors of any trust, the trustees, any protector, and all beneficiaries.

In each case HMRC requires the person’s name, address, date of birth and National Insurance number, or unique tax reference (UTR).

Beneficiaries’ details

All beneficiaries’ details need to be given – even if the trust is discretionary, or when the beneficiaries are not considered to be primary beneficiaries.  This is because, under the new Statutory Instrument that came into effect on the 26 June 2017:

Trustee obligations (Regulation 44)

The trustees of a relevant trust must provide “on request” to any law enforcement authority information about:

1. the beneficial owners of the trust; and
2. any other individual referred to as a potential beneficiary in a document from the settlor to the trust, such as a letter of wishes

Register of beneficial ownership (Regulation 45)

The Trusts Register must contain details of:

1. beneficial owners of taxable relevant trusts; and
2. potential beneficiaries (referred to in Regulation 44(5)(b) of taxable relevant trusts

Quite what the scope of this means is currently the subject of discussion, but what is clear is that trustees need to be prepared to provide names of actual and potential beneficiaries at least annually.

What action need trustees take?

All trusts with “potential” UK tax liabilities need to be registered with HMRC’s new online “Trust Registration Service” which it launched in July 2017.  This means that trustees must register and update trust records with HMRC online using its new digital “service”.

There is a two-stage process (details are available by visiting www.tax.service.gov.uk/trusts-forms/form/registration-of-a-trust/new).  In summary:

The trustees must first register for a “government gateway”.  At this stage, only trustees can register online and have to supply the following information:

• details of the assets settled into trust (including the type of trust and value)
• the identity of the settlor, trustees, beneficiaries and other people with influence or involvement in the trust (including names, dates of birth, NI numbers, passport numbers for non-UK residents)
• the tax years the trust needs to declare liability to income or capital gains tax for
• details of the deceased person (if the trust was established by will or intestacy) or the protector (if one has been appointed)
• a phone number to which a code is sent by text each time the gateway is accessed

Once registered, to log into the registered profile for the trust, there is a two-stage verification process to go through every time and this will involve the person logging on to have possession of the phone to which the freshly generated verification code is sent by text so he/she can enter it online.  Those who have already filed tax returns online will be familiar with this process.

Hopefully, agents acting for trustees will have access to the online system in October 2017.

As all types of trusts which should complete a UK trust and estate tax return are affected - Roythornes can help you …

We can assist you complete the online registration process by providing a proforma for you to follow that is tailored to your trust. 

You will find that the actual questions you are asked to answer online will, in part, depend upon the answers you give when working through the interactive list. This is because an answer given to one interactive question will determine the nature of the next question and if you are not entirely familiar with the terms being used, the task can be somewhat confusing. 

Our Trust Management department can help you handle your trust and tax compliance obligations including:

• reviewing your trust
• advising on your trustee powers and responsibilities
• preparing  trust tax returns
• preparing  trust accounts
• re-arranging and preparing deeds and documents, including trustee resolutions, investment policy statements, letters and confidential memoranda of wishes