Financial Matters
With David Frederick FCCA | Marcus Bishop Associates | marcus-bishop.com
It’s all change this August Traditionally, August is the month of the great getaway to sun, sea and sand. However, this year may be quite different for overseas holiday seekers. This has nothing to do with the challenges of our airports or airlines or any other vacation related activity. At the end of this month trustees of UK express trusts and certain non-UK trusts that came into existence on or before 6th October 2020, must ensure that their trusts have been registered with the UK Trust Registration Service (TRS). As the deadline date is 1st September 2022. The TRS was born on 26th June 2017, to provide a register of the beneficial owners of trusts. Initially, this was a component of the EU anti money laundering strategy and fulfilment of The Money Laundering and Terrorist Financing (Amendment) Regulations 2019. However, registration by 1st September 2022 arrived post Brexit in October 2020. This change automatically widened the previous legislation, which had only required trusts that paid certain taxes to be registered with the TRS. The October 2020 legislation effectively provided mandatory registration of all trusts. The new requirement became, all UK trusts, excluding those granted HMRC exemption (tinyurl. com/3vxadmws) and some non-UK trusts that came into existence on or after 6 October 2020, to register with HMRC by 1st September 2022. This also included trusts that had been closed since 6th October 2020. However, trustees of taxable relevant trusts are not granted the luxury of 1st September 2022. Such trusts set up before fiscal year 2021-22, have a registration deadline date of, on or before 31 January after the tax year in which the tax liability occurred. If the taxable relevant trust had an income tax or capital gains tax liability for the first time, the trust registration deadline is 5th October after the end of the tax year. With this in mind, it is imperative that trustees are fully aware of what trust they have and what is the deadline for registration with the TRS. It is not unusual for trusts to be born out of the will of a deceased individual. Trustees should 24 | SE21 - August 2022
be aware that will trusts are also required to be registered unless they were closed within two years of the date of death. Registration of the trust with HMRC is the responsibility of the lead trustee. However, trust deeds rarely state a lead trustee. This requires the trustees to appoint their own lead trustee and it is this trustee’s responsibility to register the trust. Some trustees may find the task of trust registration unattractive for a variety of reasons, often because it is outside of their comfort zone. If this is the case, trustees may appoint an agent to register their trust. However, the trade-off is there will be a financial charge. HMRC provides a comprehensive list (bit.ly/3o4lddO) of the information required to register a trust. Following registration of a trust, trustees have an ongoing obligation to maintain complete and up to date records of the trusts’ beneficial owners; trustees; the beneficiaries; and the person(s) who set up the trust (settlor). In addition, there is a requirement to annually update the register and in the event of any significant changes in the life of the trust. The current HMRC penalty for non-compliance is a modest £100. However, this penalty is likely to be increased to a more penal deterrent for errant trustees who deliberately fail to comply. So as August draws to a close and before trustees disappear to enjoy the sun, sea and sand, a final check must be undertaken to ensure their trust is registered or it has been delegated to an appropriate agent.
