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The ever-increasing compliance burden for trustees: the UK Trust Register

The UK Trust Register

HMRC has now withdrawn form 41G and launched a new Trust Registration Service (“TRS”)

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Senior Manager: Tax

KPMG in the Isle of Man

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HMRC has now withdrawn form 41G (the form trustees previously used to register a trust with HMRC) and launched a new Trust Registration Service (“TRS”). The TRS not only replaces the old form 41G, it also implements the EU’s 4th Anti-Money Laundering Directive regarding beneficial ownership and the creation of a national register of trusts. 

All “relevant” trusts will need to register using the TRS. A “relevant” trust includes any UK tax resident trust, and any non-UK resident trusts that have a UK tax liability, including a liability to income tax, capital gains tax, inheritance tax, stamp duty land tax and stamp duty reserve tax. It does not include a liability to corporation tax, the Annual Tax on Enveloped Dwellings or VAT.

Trustees will be required to provide details of the trust, including its name, date of creation and a statement of accounts, tax residence, where the trust is administered, contact details and the names of any advisers who are being paid to provide tax, financial or legal advice. The statement of accounts includes a description of trust assets, including their value, at the date the information is first provided. 

In addition, the details of the “beneficial owners” need to be provided, which includes the settlor, trustees and beneficiaries. The details include each beneficial owners name, date of birth, NI or tax reference number, and their residential address (if their residential address is outside the UK, details of the individual’s passport or ID card will need to be provided).

The trustees will be required to annually confirm that the information held on the Trust Register is complete and up to date.

Failure to comply with the new regulations may lead to civil and criminal sanctions. The deadlines for registration with the TRS are as follows:

  • Existing relevant trusts - 31 January 2018
  • New relevant trusts (ie trusts that have become relevant trusts in the 2017/18 tax year) – 5 December 2017
  • Trusts becoming relevant trusts in future years due to income tax or capital gains tax liabilities – 31 January following the end of the relevant tax year

At present the Trust Register is not public and only law enforcement authorities such as HMRC, the Financial Conduct Authority, the National Crime Agency, UK police services and the Serious Fraud Office will have access. The EU’s draft 5th Anti-Money Laundering Directive proposes to make such registers public, but how this will impact on the UK in light of Brexit is yet to be seen. It may be political pressure, rather than a directive from the EU, that brings the Trust Register into the public domain.

Concerns have been raised regarding data protection and the right to privacy as a result of the detailed information required by the TRS, particularly if the Trust Register becomes public. France initially made its trust register public but had to restrict access to it after the French Supreme Court ruled that public access was unconstitutional on the grounds that it was a breach of privacy rights. 

We are living in an increasingly transparent world, and trustees need to ensure that they are compliant with their tax obligations whilst also considering the data protection and privacy legislation they operate under when seeking to comply with the requirements of the TRS.

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