An overview of Trust Registration Service (TRS)
The Trust Registration Service (TRS) was introduced in 2017 with the aim of providing trustees and personal representatives with a simpler means to comply with HMRC’s disclosure and registration obligations.
In practice, complying with the TRS can create an additional administrative burden, and those affected should be aware of the requirements.
Do I need to register?
As a general rule, all trusts are required to register, with the main exceptions being charitable and life insurance trusts. That means all taxable, and since an addition to the rules in 2022, some non-taxable trusts are obliged to register.
Estates and Will Trusts created on death are also caught under the TRS.
Will Trusts, i.e. trusts arising under the terms outlined in a Will, need to register once a two year period from the death of the testator has passed, if the Will Trust is still in existence. This is happening more frequently given the length of time it is taking to obtain the Grant of Probate from the Probate Registry and the time taken to administer estates.
It is possible that the Will Trust will be required to register prior to the two year period where:
- assets are appropriated i.e. transferred to the Will Trust from the estate; and / or
- it accepts an addition of property from outside the estate.
In these circumstances the Will Trust must be registered within 90 days of the event taking place.
Penalties for failing to register are now up to a maximum of £5,000 per offence.
What details do I need?
Trustees must provide the name of the trust and date it was created, details of the settlor, trustees, and beneficiaries, as well as details of assets owned, and any business relationships in the UK.
Trustees are also required to provide details of any individual or business that has control over the trust.
At the time of registration, the trustees must choose who the lead trustee is. This trustee will be the main point of contact with HMRC unless a professional adviser is appointed to manage the TRS. It is important to take into account when determining the lead trustee that the individual will need to be able to navigate their way through the Government portal to “claim the trust” and, if required, authorise the agent. This system is not always user friendly and therefore it is important to choose a lead trustee who will have the time and capability to undertake these tasks.
Am I late registering?
This is dependent on the date of creation of the trust and whether there is a liability to tax.
As a general rule, taxable trusts created on or after 6 April 2021 are required to register on the later of 90 days from the date they are liable to tax or 1 September 2022.
If the trust was created before 6 April 2021, the trust should have been registered by 5 October following the end of the tax year that the tax liability arises.
Registrable non-taxable trusts that were in existence on or after 6 October 2020 must register within 90 days of becoming registrable, or on or before 1 September 2022 (whichever is later).
What about non-UK resident trusts?
Where a UK tax liability arises, non-UK trusts are also caught under the TRS requirement to register. In this instance, they must provide information and values of the assets held by the trust at the time of registration.
Is it the same for death estates?
Estates in administration must be registered with HMRC by 5 October after the tax year when the estate received income or has a chargeable gain on which tax is payable. To register the estate with HMRC, details of the estate and the individual who has died, together with details of the personal representatives and chargeable tax years will be required.
An estate with no income or gains must register if the administration continues 24 months from the date of death.
When the administration of the registered estate comes to an end, notification should be made to HMRC using TRS for the tax record to be closed.
The above is an overview of the Trust Registration Service. If you require any advice, please contact us.