The Christmas period may seem like a distant memory, but it brought a flurry of activity and spending, followed by the new year promise of ‘new year, new me’. It is no surprise then that the tax year end is equally as busy with ISA top ups, last minute pension contributions and resolutions to file self-assessment earlier than January!
However, this year there is a further obligation which will feature on an estimated two million ‘to do lists’. This is the registration of non-taxable express trusts to HMRC’s trust registration service (TRS) to comply with the Fifth Anti-Money Laundering Directive (5AMLD) directive by 31 August 2022.
From 1 September 2022 all trusts will need to prove their registration with HMRC before they can either establish or maintain a relationship with any organisation who complies with anti-money laundering legislation. This includes accountants, solicitors, financial advisers, platforms, providers etc. This alone should be a significant incentive to ensure trusts are registered but when this is coupled with the threat of HMRC fines for non-registration and the fact all trustees are jointly liable for this obligation, you start to appreciate this is not something which can simply be forgotten like many of those January new year's resolutions.
Due to the scale of the service, it was perhaps understandable that it was delayed numerous times from the anticipated launch in March 2021. While HMRC has attempted to streamline the process, the task of registering a trust is not straightforward.
The online only trust registration service cannot be accessed by any trustees still operating on Microsoft Windows Vista/XP or older iOS systems, so they need to ensure they have the correct IT system in place at outset.
Each trust then needs to be registered individually for a Government Gateway account prior to the TRS being completed. The TRS itself requires trustees to have to hand a raft of information on the trustees, beneficiaries, and trust property. Altogether, trustees can expect to complete around 75-100 screens for the registration of each trust.
Frustratingly for all, from point of registration, HMRC need to be notified of any trust changes within 90 days of them occurring. These include simple changes such as a change of name through marriage or divorce, updating an address for any of the named parties, changes to the trustees on the trust or the taxable status of the trust itself. Following the payment of fund to a beneficiary, the trustees will also need to ensure they are individually listed with the TRS. The process is potentially complex therefore if you have any trusts which you believe might require registration, please contact one of our consultancy team who will be happy to help.