HMRC is extending the Trust Registration Service (TRS) to enable non-tax paying trusts to register in compliance with the Money Laundering Regulations. Gerry Brown reviews the deadlines, the TRS Manual and looks at common trust arrangements and third-party access requests.
The full implementation of the Trust Registration Service (TRS) has been delayed, but it hasn’t gone away. The IT issues which caused the delay have now been resolved. Registration of non-taxpaying trusts will go live in September 2021.
HM Revenue & Customs (HMRC) had facilitated the registration of some non-tax paying trusts to “test the system” and it seems the testing is now complete.
In March, it announced an update with details on timescales and registration deadlines, including:
- the IT system to open for registrations in the summer, rather than the spring, of this year, and
- extending the registration deadline of March 2022, to give trustees and agents of existing trusts approximately 12 months to register.
The Trust Registration Service Manual
In May, HMRC published a Trust Registration Service Manual (TRSM), which covers:
- the categories of trusts requiring registration
- the categories of trust that are exempt
- the information required to complete registration
- deadlines for both registration and updating information
- trustee data retention obligations, and
- third-party access requests.
HMRC intends to publish further TRS material in due course.
The TRS Manual contains a wealth of practical information on the registration process. As a paraplanner, you’ll should familiarise yourself with the manual’s content and its updates.
Common trust arrangements
In a separate development HMRC has confirmed that the common trust arrangements – used in inheritance tax planning strategies such as discounted gift trusts and loan trusts – will need to be registered.
The registration process involves collecting information on:
- the trust
- the settlor
- the trustees
- the beneficiaries, and
- “any person who has control over the trust”, eg protectors.
Collecting and checking this information will be time consuming and advisers will have to decide who is to meet the costs of this process. Ultimately any penalties for late or incomplete registration will fall on the trustees, so trustee clients need to be advised of this.
However, the details of penalties have not yet been included in the TRSM.
Third-party access requests and the TRS
Certain limited information on the beneficial ownership of registered trusts can also be subject to third-party access requests. Law enforcement authorities can make requests for information on the register. The Money Laundering Regulations currently allow data sharing requests to be made.
However information held on the TRS regarding beneficial owners cannot be shared with third parties if that beneficial owner lacks mental capacity.
Trustees – or agents acting on behalf of the trustees – need to record on TRS when a beneficiary lacks mental capacity. This information will only be used to determine if a data access request can be complied with and may not be used for any other purpose or shared with third parties.
Try explaining that to trustee clients!
Advisers – and in practice that will mean paraplanners – will need to communicate with trustee clients as soon as possible to get the registration process under way. Plan now to avoid stress in 2022.
Gerry Brown is a Consultant at QB Partners. He began his professional career as an inspector of taxes and later qualified as a chartered accountant. He’s worked at a number of financial services companies providing technical support and contributes to our Diploma in Paraplanning (DipPP).
Find out more about our Diploma in Paraplanning (DipPP)