The 31 January deadline for Trusts Registration Service notifications to Her Majesty’s Revenues and Custums (HMRC) has been at the centre of attention due to the many changes in compliance requirements that have taken place over the past year.
Changes in the system have been driven by the EU’s Fifth Money Laundering Directive, the effect of which has been brought into English law by the Money Laundering and Terrorist Financing Regulations 2020, which came into force on 6 October 2020.
The main novelties are:
- A wider scope of obligation, which now includes not only “taxable relevant trusts”, but all UK express trusts unless explicitly exempted.
- The exemptions are now narrower and more complex, relating mainly to registered pension schemes and UK charitable trusts.
- The obligation to provide information to HMRC has been made more onerous. UK trusts (and some non-UK trusts too) are now required to provide more information about beneficial owners, and potential beneficiaries mentioned in letters of wishes. The required information relates to the beneficiary’s name, NI number or address, date of birth and role in relation to the trust, together with general trust information and any updates on the data previously provided.
- Deadlines for providing information will in future be shorter. The current deadlines are 5 October following the end of the tax year (where the trust has a new liability to CGT or income tax liability) and 31 January (in all other cases). From 9 February 2022, information will have to be provided within 30 days of creation of the trust, or of a change to the registered information requiring notification.
With the increase in complexity for compliance requirements relating to the registration of trusts in UK, trust and estate practitioners will therefore be demanded a higher attention and preparation to comply with the changes in the regulatory system.