The Trusts Registration Service (TRS) is a new service that will provide a single online route for trusts and complex estates, to comply with their registration obligations and to obtain their Self-Assessment (SA) Unique Taxpayer Reference (UTR). For more information read TRS Guidance FAQs – 22 November 2017.

*Latest updates from HMRC via CIOT*

• 4 January 2018
• 15 February 2018

It replaces the current paper 41G (Trust) form and the ad hoc process for trustees to notify HMRC of changes in their circumstances. Trusts that are required to register with HMRC are now required to do so through the TRS. The TRS will provide a single online route for trustees, and personal representatives of complex estates, to comply with their registration obligations. The benefits include:

• no more forms lost or delayed in the post
• you will only see those questions relevant to your particular type of trust or complex estate
• you can print a copy of the summary page and keep this for your records.

With effect from 17 November 2017 the customer journey for registering a trust has been made simpler. Agents can now access the TRS directly without having to submit an email to HMRC and wait for approval to gain access to Agent Services in order to commence the trust registration process. For further information please visit our guidance on GOV.UK.

• Register your client’s Trust
• Register your client’s Estate

The trustees of a charitable trust will not have to register until they incur a liability to pay any of the relevant UK taxes. The list of relevant UK taxes is: income tax, capital gains tax, inheritance tax, stamp duty land tax, stamp duty reserve tax, land and buildings transaction tax (Scotland). If after claiming a tax relief the trustees have not incurred a liability, in a given tax year, to any of the relevant UK taxes then HMRC would not expect them to register on the TRS.

However, ALL charitable trusts are expected to maintain accurate and up-to-date written records of “beneficial owners” under reg 44(1). 

When do trustees need to complete and submit the registration?

This depends on whether the trust is already registered for Self-Assessment (SA) for income tax or capital gains tax. Click the following link for more information on who should register.

• Trust already registered for SA: If the trust is already registered for income tax or capital gains tax and the trustees of the trust have incurred a relevant UK tax liability in a given tax year, then registration must take place by 5 March 2018. This is an informal extension of the deadline, negotiated by the Association of Taxation Technicians and the Chartered Institute of Taxation, even though gov.uk still shows a deadline of 31 January 2018 for existing trusts
• Trust not registered for SA: If the trust is not registered under SA and has incurred either an income tax or a capital gains tax liability for the first time in a given tax year then registration must be completed by no later than 5 October after the end of that tax year. Following feedback from agents and stakeholders HMRC has announced that the Trust Registration Service (TRS) deadline for new trusts has been extended further from 5 October 2017 to 5 January 2018.
• Trust not registered for SA: If the trust is not already registered for SA or does not need to register for SA and has incurred either an inheritance tax, stamp duty land tax, stamp duty reserve tax, or a land and buildings transaction tax (Scotland) liability in that tax year, then registration must be completed by no later than 5 March 2018, according to the informal extension above.

For more information read TRS Guidance FAQs – 22 November 2017. The registration deadlines and information required to register can be found online.

FAQs on beneficiaries

H. DETAILS OF THE BENEFICIARIES

Previous guidance (in October 2017) for trustees in relation to the use of a “class” to describe the beneficiaries of a trust stated that if any member of a class of beneficiary could be “determined”, by for example when a beneficiary is born or is known by his or her name, then we expect trustees (or agents acting on behalf of trustees) to disclose their identity details on the Trust Registration Service (TRS).

HMRC officials have confirmed that having listened to stakeholder feedback about this interpretation of the legislation (specifically regulations 6(1)(d), 45(2)(d) and 45(8)) they have revised our position to allow trustees to make appropriate use of the description of the “class” in order to describe the trust’s beneficiaries, where not all of those beneficiaries have been determined. Where a beneficiary is named on a trust instrument separate from members of a named class then they can clearly be determined and trustees must provide the relevant information.  This is unchanged.  Where a beneficiary is un-named, being only part of a class of beneficiaries, a trustee will only need to disclose the identities of the beneficiary when they receive a financial or non-financial benefit from the trust after 26 June 2017 – the commencement of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.

HMRC want to get an accurate picture of who can benefit from a trust.  Some trusts may list named individuals, who only become potential beneficiaries contingent upon, for example, the death of a named beneficiary or in circumstances where there are no remaining named beneficiaries or beneficiaries in a class of persons. Where this occurs we are content that the individuals are listed as a class of beneficiaries, until such time as the contingent event occurs.  At that point the individual potentially stands to benefit and should be named

The above changes apply to both:

• regulation 44 (where trustees of a relevant trust are required to maintain accurate and up to date written records of the beneficial owners of the trust); and,
• regulation 45 (where trustees of a taxable relevant trust are required to register the beneficial owners of the trust with HMRC using the TRS).

HMRC  has set out below some examples to illustrate how we now expect trustees to register (actual or potential) beneficiaries on the TRS or in the case of regulation 44, to maintain written records. To reiterate, a trustee would not be committing an offence under the legislation if they could show that they had taken all reasonable steps to obtain the relevant information.

HMRC is in the process of updating the guidance on GOV.UK to reflect its revised position.

Example A

A Trust Deed states that the beneficiaries are the grandchildren (some are alive and some are yet to be born in the future) of the settlor and any other persons added by the trustees as per instructions from the settlor. The settlor adds his niece, Mary, so that she will benefit at the trustees’ discretion. The settlor also adds that, if Mary dies before any of the grandchildren, then a distribution can be made to John (a nephew of the settlor).

In this case, under the TRS the grandchildren should be listed as a class. However, if the trustees make a financial payment or provide a non-financial benefit to any of the grandchildren then at that point in time the trustees should record the identity details of that particular grandchild that has been in receipt of a benefit.

Mary’s details should be registered as an individual, as she could receive a benefit at any point in time.

John should be identified as a class of beneficiary but if at some point in time in the future John is in receipt of a benefit from the trust assets or income then this means he can be identified by name and as such his details should go on the TRS.

Example B

Deed says – John Smith and Jane Green, their children and grandchildren and a charity chosen by the eldest child of John and Jane. To date only John and Jane have received a financial benefit from the trust assets/income.

John Smith and Jane Green should be registered as they have been “determined” in light of trustees being able to make a trust distribution and are a named beneficiary.

Children and grandchildren are recorded as a class and also the charity should be recorded as a class as the name of the charity has not been determined/identified. When a child or grandchild receives a benefit from the trust assets/income then at that point in time he or she should be named on the TRS.

Likewise, when the charity receives a trust benefit at some point in the future, then the details of the charity should be recorded on TRS at that point in time because in order to have received a financial benefit the trustees must have been able to determine/identify the charity.

O. REGISTERING A CHARITABLE TRUST

Do charitable trusts need to register?

The two conditions for registration are:

• Condition A: is the trust in question either a UK express trust or a non-UK express trust with either UK source income or UK assets; and,
• Condition B: have the trustees incurred a liability to pay any of the relevant UK taxes.

If the answer to both of these questions is “yes” then the trustees need to register.

Will charitable trustees need to follow this process every tax year?

Yes. The trustees will need answer each of these two questions/conditions each tax year as registration is linked to when the trustees incur a liability to pay any of the relevant UK taxes.

What is an express trust?

In March 2017, HM Treasury published its response to its consultation on the implementation of the Fourth EU Money Laundering Directive. That response set out that: “The term “express trust” should be taken to mean a trust that was deliberately created by a settlor expressly transferring property to a trustee for a valid purpose, as opposed to a statutory, resulting or constructive trust.”

Which charitable trusts need to register?

A charitable trust will need to register when the trustees have incurred a liability to any of the relevant UK taxes in a given tax year in relation to the trust income or assets. Therefore, a charitable trust will only need to comply with the legislation if their activities generate a tax liability that falls outside the scope of the charity exemptions, for example, where a charity incurs non-charitable expenditure and/or is in receipt of nonexempt income.

How does a charitable trust register?

The TRS is not currently available for charitable trusts. Those charitable trusts that need to complete the Trusts Register should contact HMRC by telephone on 03000 123 1072 and request a copy of a paper form.

What happens if I have a large number of beneficiaries do I need to register the details of each and every beneficiary?

To help keep administrative burdens to a minimum for trusts with particularly large numbers of beneficiaries (such as occupational pension schemes, charitable trusts and employee benefit trusts) the trustees will only be asked to identify the class of beneficiary if the number of named beneficiaries exceed ten. These type of trusts (except occupational pension schemes) will, however, be required to provide the identities of key employees and Directors.

Are donors to a charity to be treated as settlors and therefore his or her details need to be registered?

We do not consider donors to be settlors and therefore the details of a donor does not need to be included on the TRS as long as he or she has no influence or control over the trust nor receives a financial benefit from the trust.

Do the trustees of all charitable trusts need to maintain accurate and up to date written records of beneficial owners under regulation 44(1) of the legislation?

Yes. We expect the trustees to maintain accurate and up to date written records of all beneficial owners of the trust as set out under regulation 44(1) of the legislation. This information should be held because under the legislation any law enforcement authority can make a request directly to the trustees for information about the beneficial owners of that trust including from a trust which does not incur a liability to any of the relevant UK taxes. See section K for further details.

If a charitable trust is already registered with HMRC can HMRC just migrate the details it currently holds onto the TRS?

No. The trustees will need to provide details about the trust on the TRS when a trust meets the condition for registration. This should be a one off exercise and then going forwards it should be just about updating the details to ensure the trust data is accurate and up to date. The 41G paper form did not collect sufficient information to meet the requirements of the new legislation, so those trusts which registered with HMRC before the launch of the TRS will need to use the service to provide all the information that is now required through the legislation.

Some of the older charitable trusts will have difficulties in providing all the trust data details such as the telephone number and NINO of the settlor?

We would expect trustees to take all reasonable effort and steps to obtain the information requested and ensure accurate and up to date written records are maintained of all the beneficial owners. A trustee would not be committing an offence under the legislation if they could show that they had taken all reasonable steps to obtain relevant information.