On 1st September 2022 new and expiring trusts must be registered with the new service from HMRC the ‘Trust Registration Services’ following new laws incorporated in October 2020. The reform was one of the last of the EU’s directives that the UK adopted before it’s departure.
The types of trusts that are now required to be registered with HMRC’s Trust Registration Services (TRS) have been expanded under the incoming rules. Prior to this, only trusts which incur a UK tax liability needed to registered, however new regulations mean that most UK trusts must be registered unless specifically excluded. Therefore, anyone already acting as trustee of a trust that hasn’t registered yet must consider whether the trust is now registerable, as should anyone looking to set up a trust.
This will be a further administrative task for trustees in the future. The trust will need to be signed up to the register by the deadline or within 90 days of a trust’s creation.
However, the Freedom of Information Act 2000 request, has shown that the Trust Resignation Service (TSA) has only received just over 153,000 trust registration applications since the full operation began in June 2017.
It is estimated that up to one million new and existing trusts must be registered with the service by the deadline of 1 September 2022, meaning that almost 170,000 trusts will need to be registered every month from now until September, according to Canada Life, who submitted the freedom of information request.
The penalty for late submissions is still being developed by HMRC, but initial propositions suggest trustees who fail to comply with the rules could face fines of up to 5 per cent of the trust’s tax liabilities or £300, whichever amount is greater. All trustees would be jointly liable for fulfilling the obligation.
Stacey Love, Estate Planning Specialist at Canada Life also commented that they were seeing an increase in the number of applications that were being received. Love commented: “Given recent estimates that one million registrations may need to be completed, I suspect HMRC will experience a flood of registrations over the coming months” she stresses that advisors should be encouraging their trustee clients to register well ahead of the deadline.