The Trust Registration Service (TRS)

Neal Groves considers HMRC’s tax regime

Do you need to act?

The Trust Registration Service (TRS), managed by HM Revenue & Customs (HMRC), has been with us since 2017, and most trustees will already be well acquainted with the need to register and to provide certain information pertaining to the trust, including details of settlors and beneficiaries.

Initially only express trusts (including non-resident trusts) with a UK tax liability were required to register with the TRS – and if this has not already been done, then action should be taken as soon as possible to remedy this by completing a late registration.

In 2020, the UK implemented the Fifth Money Laundering Directive – and as a consequence of this, the types of trust that are required to register with the TRS have expanded dramatically. The looming deadline for registration is 1 September 2022.

What has changed and who now needs to register?

Previously only trusts with a UK tax liability were within the scope of the TRS.

Now the rules state the following trusts are required to register:

UK Trusts

• All UK resident express trusts including bare trusts, regardless of whether they have a UK tax liability.
• This includes nominee arrangements where maybe shares are held in a nominee’s name, but the beneficial ownership is elsewhere.
• Non express trusts and some express trusts, which might otherwise be excluded, are also required to register if they have a UK tax liability.

Definitions:

• An “express trust” is one created by the deliberate actions of a settlor.
• A trust is UK resident if all of the trustees are UK resident, or if there is a mix of UK and non-UK trustees and the settlor of the trust was either UK resident or UK domiciled when the trust was created or additional funds were added, or one of the trustees is a UK resident corporate trustee.

Non – UK resident trusts

Non-UK resident express trusts that either:

• acquire land or property in the UK.
• have at least one UK resident trustee and have a business relationship with an “obliged entity” (accountant, tax adviser, legal adviser, estate agent etc.)

Trusts excluded from registering for the TRS

There are a limited number of trusts which are not required to register for the TRS (unless they have a UK tax liability). The main groups are:

• Bare trusts required to open a bank account for a child.
• Charitable trusts
• Trusts for bereaved minors or adults aged 18 – 25. 
• Will trusts for the first two years after death.
• Trust created and imposed by a court order.
• Trusts used to hold life or retirement policies provided the policy only pays out on death, critical illness or to meet the healthcare costs of the person assured.

Deadlines

The deadline for registering the trust is dependent on when it was created and when the tax liability first arose.

If there are any changes to the trust details or beneficial ownership the TRS must be updated within 90 days. HMRC may impose penalties for late registration, or if the details are not kept up to date. Trustees may also find it more difficult in the future to do business with ‘obliged entities’ such as banks, who may require you to demonstrate that the trust is correctly registered.

Action needed

Trustees must review the position of the trust and consider if the trust is already registered with the TRS or if it now urgently needs to do so before 1 September.

Neal Groves is partner and head of personal tax with Beavis Morgan LLP: beavismorgan.com