The regulations implementing the Fourth Money Laundering Directive (MLD4) came into force on 26 June 2017 and with them came the requirement for certain trusts to provide specified information to HMRC.
To facilitate the provision of the information required under MLD4, HMRC has launched the TRS. The current version of the TRS allows trusts to register with HMRC and provide the required information but this is still only phase 1 of the project. In 2018 HMRC expect phase 2 to deliver additional TRS functionality allowing information provided to HMRC to be updated, changed and maintained.
The TRS went live for trustees in July 2017 but did not go live for agents until mid-October
Reg 45 of the MLD4 regulations imposes upon HMRC a requirement to maintain a register of beneficial ownership:
45(1) The Commissioners must maintain a register (“the register”) of—
(a)beneficial owners of taxable relevant trusts;
(b)potential beneficiaries (referred to in regulation 44(5)(b)) of taxable relevant trusts. [our underline]
As the underlined terms show, the register is framed around what constitutes “taxable relevant trust”. That definition is built upon the wider definition of a “relevant trust” (a concept which is important in its own right in relation to other non-register related obligations the discussion of which is outside the scope of this article).
A “relevant trust” is defined as (broadly):
A “taxable relevant trust” is (broadly) a “relevant trust” that, in a specific tax year, is liable to income tax, CGT, IHT, SDLT, LDTT or SDRT.
In the context of employment related trusts therefore, a UK resident EBT is likely to be considered a “taxable relevant trust” (it will certainly be a “relevant trust”).
On the other hand, an offshore EBT may or may not be a “taxable relevant trust” – this will depend upon the exact circumstances (e.g. is a dividend waiver in place? how are the shares owned?).
A SIP must be UK resident so will certainly be a “relevant trust”. However, as SIPs are normally exempt a SIP
should not constitute a “taxable relevant trust” for most tax years (in certain circumstances it will).
An EOT is likely to be a “taxable relevant trust”.
The information required from the trustees of a “taxable relevant trust” is extensive. The following information must be supplied regarding the trust:
The following must be provided regarding the beneficiaries:
And the following must be provided regarding corporate beneficiaries:
Where the beneficial owners include a class of beneficiaries, not all of whom have been determined, a description of the class of persons who are beneficiaries or potential beneficiaries under the trust is also required.
Wher e the trustees of a “taxable relevant trust” become aware that any of the information provided has changed they must notify the Commissioners of the change and the date on which it occurred on or before 31st January
If the trustees are not aware of any change to any of the information provided, they must confirm that fact to the Commissioners on or before 31st January after the tax year in which the trustees are liable to pay any UK taxes (i.e. after a tax year in which the trust is a “taxable relevant trust”). This is done via the tax return (box 20 for 2016/17).
The deadlines for MLD4 purposes are those set out above i.e. 31st January after a tax year in which the trust is a “taxable relevant trust”.
However, as part of the introduction of the TRS, HMRC also decided to cease using Form 41G (Form 41G was the form trustees traditionally completed to obtain a trust UTR). The TRS now serves the function of registering a trust for both MLD4 and UK tax purposes (i.e. obtaining a UTR).
Because of this dual function, new trusts requiring a UTR for filing a 2016/17 tax return therefore needed to register on or before 5 October 2017 although HMRC have said they will not levy penalties if this is done before 5 December 2017.
Trusts which already have a UTR need to register and report the information listed above via the TRS by 31st January. They also need to file any tax returns as normal by 31st January 2018.
Trustees of trusts which already have a UTR should note that no information provided previously on the Form 41G will be pulled through into the TRS so they should be prepared to provide all the relevant data.
We are currently waiting on HMRC to confirm what penalty measures will be applied forfailure to comply with the above deadlines.
Further information can be found here along with a series of FAQs published by HMRC.
If you have any further queries, please do not hesitate to get in touch with your normal contact or email firstname.lastname@example.org
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