Trust arrangements – significant changes to reporting requirements introduced
Trust arrangements saw significant changes to reporting requirements introduced in September 2022. The changes are a result of the 5th Anti-Money Laundering Directive (5AMLD) which extends the requirement to register certain ‘arrangements’ using the HMRC Trust Registration Service (TRS).
You should be aware that the new requirements are very broad and include many arrangements which had no registration requirements previously. Broadly, the old regime only required trusts which were taxable to register with HMRC. The new arrangements go much further to include non-taxable trusts and many more types of arrangements.
For example, the following arrangements may need to be registered with HMRC.
- Nominee / bare trusts arrangements: This is where the legal owner of an asset is different from the beneficial owner.
- Deeds of assignment: Often used in relation to property to transfer all or part ownership of a property to another person. These are sometimes used to transfer property between spouses or family members.
- Will trusts: Trusts created by someone’s will. For example, a will may provide that income received from an asset(s) will be paid to the surviving spouse for their lifetime, with the capital then passing to the deceased’s children.
- Inheritance tax / financial planning arrangements: These may be packaged products, set up by a financial advisor or applied for online. They may be structured as a trust, but as there was no income or gains arising the trust was not taxable and had no requirement to register under the TRS previously. They must now be registered.
- Non-UK arrangements: The rules can also apply to non-UK accounts and arrangements, so any offshore interests should also be reviewed carefully.
If you have one of these arrangements, accounts or products, you may be required to register using the new TRS under the new regime.
Are you unsure about whether you need to register your Trust arrangement under the new requirements? Get in touch with our team today to discuss your individual circumstances.
The register of trusts process
HMRC has updated the TRS so that it is capable of handling the registrations required under 5AMLD. Trustees of existing non-taxable trusts and affected arrangements should have submitted their initial registration to HMRC using TRS by 1 September 2022.
The registration process requires a separate Government Gateway account to be created for the Trust, and the information to be reported may not all be immediately available, so we recommend that you review any arrangements as soon as possible.
Once the initial registration has been submitted, the trustees will also be required to report any changes to the register within 90 days of the change. HMRC can impose penalties on trustees who fail to meet the reporting deadlines.
Trust reporting requirements – what happens if you miss the registration deadline
We recommend that anyone who has missed the deadline, to register their trust as soon as possible. HMRC have stated that because it is a new obligation, non-deliberate failures to register or later registrations will not incur a penalty on their first offence. However, where registration failures are deliberate, such as a trust not being registered following a HMRC warning letter, a £5,000 penalty could occur per offence.
If you need assistance with assessing whether you need to register under TRS, or help with the submissions process, contact our team for assistance.
How can Alexander & Co assist with your Trust arrangements?
Alexander & Co can help you by:
- Reviewing any arrangements and advising you as to whether you need to register under TRS.
- Preparation and submission of the initial registration to HMRC.
- Being appointed as agents to update and maintain the trust register on your behalf.
Should you require assistance from Alexander & Co with existing Trust arrangements, if you are considering a Trust arrangement or using any of our other services, please contact us using the form below or email firstname.lastname@example.org.
Visit our dedicated trust services page for more.