Trustees can be forgiven for becoming a little weary at the blitz of regulation that has come their way in recent years from FACTA to CRS and now the recently introduced trusts registration service. Action is imperative, however, to comply with the new rules and the relevant deadlines are only a matter of months away.
What is happening?
The Fourth Anti-Money Laundering Directive puts certain obligations onto EU member states and legislation making these requirements part of UK law came into force on 26 June 2017. One of the obligations is for member states to record particular information in respect of trusts. As part of the implementation HMRC has created an online trusts registration service (TRS) accessed through the government gateway. This will enable HMRC to maintain the required register of beneficial ownership. This register will not be open for public inspection.
Which trusts will be affected?
All trusts will be affected to a greater or lesser extent. The extent will depend on whether the trust has UK tax consequences in any particular tax year. Any trust which currently submits a tax return will have UK tax consequences (ie the trustees will be liable to pay, for example, income tax or capital gains tax) and a current non-tax paying trust could have UK tax consequences in the future.
All trusts with tax consequences not currently on HMRC’s records will have to be registered with the TRS by 5 October following the tax year in which the trust was created or first had tax consequences (if later). Existing trusts already registered with HMRC under the previous paper system will have to confirm or amend the information held by HMRC by 31 January 2018.
- Trust A pays income tax and completes a tax return each year. It will have to confirm, or amend, the information held by HMRC by 31 January 2018.
- Trust B was created on 20 September 2016 and is also liable to income tax; it has until 5 October 2017 to register with the TRS.
- Trust C holds non-income producing assets and does not need to register yet as it is not liable to pay any UK tax. However, when in 2018/19 it disposes of some investments and becomes liable to capital gains tax the trust will need to register with the TRS by 5 October 2019.
All trusts, whether or not they currently have UK tax consequences, will have to maintain accurate and up-to-date records of all existing beneficial owners of the trust, and of all potential beneficiaries.
What sort of information will be required?
The information required includes:
- Details of the trust assets, including any applicable addresses and values;
- The identity of the settlor (the person who created the trust or provided funds for it), the trustees, any protector, any persons exercising effective control over the trust and the beneficiaries or class of beneficiaries; and
- The name, date of birth, national insurance number (for UK residents) and (for non-UK residents) their passport or ID number (including country of issue and expiry date of the passport or ID) of all of the above named persons.
As mentioned above, to comply with the new money laundering regulations, all trustees are obliged to maintain accurate and up-to-date written records of all beneficial owners of a trust including details of potential beneficiaries. “Beneficial owner” is defined as:
- The settlor
- The trustees
- The beneficiaries
- The class of persons in whose main interest the trust is set up or operates if the beneficiaries have not yet been determined
- Anyone who has control over the trust (which is defined by the relevant regulations).
If the administration of your trust is not currently carried out professionally, we would be happy to advise you on the above requirements and to give you details about our trusts administration service.