What you need to know
Why has this been introduced?
Reporting obligations for trustees of certain trusts were introduced on 26th June 2017 as part of the UK’s implementation of the Fourth Anti-Money Laundering Directive.
The regulations impose obligations on trustees to keep records on the beneficial owners of the trust that they administer. The regulations can be found here.
Which trusts are affected?
The regulations apply to “relevant trusts” which in these circumstances include any "express trusts" (i.e. a trust which has been deliberately created by a settlor) whose trustees are either:
The trustees of a taxable relevant trust must provide HMRC with certain information of beneficial owners and potential beneficiaries for inclusion on a register to be maintained by HMRC. The register went live on 10th July 2017 and can be found here.
What is a taxable relevant trust?
A taxable relevant trust is a relevant trust in any year in which the trustees (not the beneficiaries) are liable to pay any of the following in the UK - income tax, capital gains tax, inheritance tax, stamp duty land tax or stamp duty reserve tax.
Who is a beneficial owner in relation to a trust?
The settlor, the trustees, the beneficiaries, the class of persons in whose main interest the trust is set up (where the individuals or some of the individuals benefiting from the trust have not been determined), and any individual who has control over the trust.
Who is a potential beneficiary in relation to a trust?
Any other individual referred to as a potential beneficiary in a document from the settlor relation to the trust such as a letter of wishes
What information needs to be disclosed to HMRC?
The following information must be disclosed by the trustees for inclusion on the register:
Information in respect of trust
|Information in respect of beneficial owner or potential beneficiary|
When must the information be provided to HMRC?
The Trusts Online Service should be used to register a taxable relevant trust with HMRC - this replaces the previous practice of registering a trust using form 41G. HMRC’s comments on the registration service state that new trusts must register by 5 October of the tax year after the trust is set up or when it starts to make income or chargeable gains, if this is later, in line with the existing rules on notifying chargeability to income tax or capital gains tax. However, the regulations state that the relevant information must be provided on or before 31 January 2018 or 31 January following the end of the first tax year in which the trustee first became liable to pay the applicable UK taxes.
If the trustee becomes aware that any of the information provided to HMRC has changed (other than information in relation to the value of the trust) then it must notify HMRC of the change and the date on which it occurred on before 31 January after the tax year in which the change occurred, or if they are not liable to pay any of the UK taxes noted above in that year, after the tax year in which the trustees are liable to pay any of the UK taxes noted above.
Will the register be publicly available?
No, but the information on the register may be inspected by certain law enforcement authorities including HMRC itself, the FCA, NCA and others.
Are there are any other obligations for trustees?
The trustees of a relevant trust must maintain accurate and up to date records in writing of all of the beneficial owners of the trust and of any potential beneficiaries.
When then trustee of a relevant trust enters into a relevant transaction with a relevant person it must provide details of the beneficial owners to that person on request. A relevant person is a person undertaking certain activities in the course of a business carried on by them in the UK and a relevant transaction is a transaction in relation to which the relevant person is required to apply customer due diligence measures under the UK regulations.
The trustees of a relevant trust must on request provide information to any law enforcement agency (as defined in the regulations) about the beneficial owners of the relevant trust and any other individual referred to as a potential beneficiary in a document from the settlor relating to the relevant trust such as a letter of wishes.
What is the position in other EU Member States?
The Fourth Anti-Money Laundering Directive must be implemented in all EU Member States and therefore local trustees should anticipate potential reporting obligations in EU Member States.
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