Associate solicitor Louise Nelson, in our leading Wills, Probate, Tax & Trusts team, explains why care must be taken by non-professional Executors following the implementation of the Trust Registration Service.
The Trust Registration Service (“TRS”) was first set up in 2017 as part of the UK’s implementation of the EU anti-money laundering directives and has now come into effect and been transposed into UK law through the Money Laundering and Terrorist Financing (Amendment) (EU exit) Regulations 2020. The 2020 Regulations took effect on 6 October 2020 and require all UK express trusts (with some exceptions) to register on the TRS, whether or not they have a liability to UK tax.
The requirement to register will affect a large number of individuals and organisations, and is a consideration both for the professionals who are drafting Wills and for those acting as Executors. The complexity of the trusts which must be registered covers a wide range from high net worth trusts with multiple beneficiaries to more straightforward trusts such as those holding modest legacies for children until they reach the age of eighteen.
There are deadlines for registration which differ for taxable trusts dependent on whether they were created before or after 6 April 2021. Non-taxable trusts in existence on 6 October 2020 must register by 1 September 2022. Those created after 6 October 2020 must register within 90 days of being created or by 1 September 2022 (whichever is later).
So far, the penalties for failure to register or update details within the time limits are not yet set out in legislation but rather in HMRC’s consultation document. They are fairly light with HMRC acknowledging the “extensive use of trusts throughout the UK and the fact that initially many lay trustees may not be aware of their obligations”.
Although some types of trust are specifically excluded from the obligation to register, it is expected that HMRC will receive an enormous amount of information as advisers review existing trusts and register with the TRS as needed. Lay Executors and Trustees should familiarise themselves with the rules or take advice if they are unclear as to their reporting obligations.
For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800.
This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.
