The coming extension of the online UK Trust Registration Service (TRS) to cover express trusts without any tax consequences, under the EU Fifth Anti-Money Laundering Directive (5AMLD), is likely to extend the number of registrable trusts from around 200,000 to as many as two million, according to the Association of Taxation Technicians (ATT).
The service was set up last year to meet the requirements of the EU Fourth Anti-Money Laundering Directive, as transposed into UK law in June 2017. Currently, the registration and updating requirement only applies to express trusts with a tax consequence, but 5AMLD removes the tax consequence criterion.
This could include trusts connected with financial products such as life policies, shareholder protection policies, whole of life policies, discounted gift trusts, and perhaps even all property owned jointly including land and bank accounts, says the ATT’s Helen Thornley.
It also brings into scope non-EU resident trusts that own UK real estate or that have a business relationship with an entity obliged to carry out customer due-diligence in the UK, such as a bank, estate agent, accountant, or solicitors. This will require many more trusts, and offshore trusts in particular, to be registered than at present, says law firm Boodle Hatfield. Extending the reach of the register will also increase the number of unrepresented trustees.
The UK has until 10 January 2020 to incorporate 5AMLD into domestic law, and then must implement the trust registration requirements by 10 March 2020. The UK government has already confirmed that this will happen irrespective of Brexit. A consultation on the initial policy changes, including penalties, is expected in late 2018 or early 2019, with a further consultation on the draft regulations in spring or summer 2019.
Agents should start to consider how many more of the trusts which they act for will be in scope by 2020, and how they will tackle this second round of registrations, says Thornley. She notes that the TRS had severe problems when first launched a year ago, and still does not offer all the required functions, such as the need to update the details of a trust already on the register.