The new HMRC Trust Registration Service - what advisers need to know
At the SimplyBiz Group, we have received numerous calls enquiring about the new HMRC Trusts Registration Service, which is a compulsory online service for lead and corporate trustees that builds on existing tax reporting mechanisms. Given the types of queries we’ve heard, I’d predict that many advisers across the industry have the same questions.
Historically, trusts have been registered and updated via a paper form, Form 41G (Trust) which was withdrawn at the end of April 2017.
It has been a longstanding requirement to register a new trust with the HMRC, and the online Trusts Register will provide a single point of access to register and update trusts online, replacing the paper form.
The register will be in line with HMRC’s digital strategy and provide greater tax transparency going forward, as well as implementing the requirements of the Fourth Money Laundering Directive.
- All trusts with a UK tax consequence will need to be registered, including those that have already submitted a paper registration form (Form 41G (Trust)) to HMRC
- Any new trusts with a UK tax consequence will be required to use the registration service to obtain a unique taxpayer reference
- Trustees will need to update the register each year that the trust generates a UK tax consequence
- Trustees must ensure and confirm that the Trust Register is accurate and up to date, ensuring their obligations under the EU Fourth Money Laundering Directive are complied with.
Complex estates will also be required to use the service to obtain a Unique Taxpayer Reference.
An estate is considered complex if the value of the estate exceeds £2.5 million, tax due for the whole of the administration period exceeds £10,000, or the value of assets sold in any tax year for date of deaths up to April 2016 exceeds £250,000 or £500,000 for date of deaths after April 2016.
It should be noted that annual reporting by trustees is only necessary if the trust generates tax in that tax year. As a consequence of this, some trusts - bare trusts for example - will be excluded from reporting.
The registration requirement also does not apply to trusts that have closed, where the trustee or their agent has received a letter from HMRC, stating that HMRC has updated its records to show that the trust has ended. This could have happened a number of years ago.
We have been verbally informed by HMRC that the register will be launched on June 24th 2017. Once the system is up and running trustees will need to complete details of the trust assets including address(es) and values and the identity of the settlor, trustees, protector (if any), all other persons exercising effective control over the trust (if any) and the beneficiaries or class of beneficiaries.
The online service is being rolled out in phases. Initially only lead trustees and personal representatives will be able to use it. It is expected that ‘agents’ should be able to register new trusts by October 2017.
It should be noted that the Trust Register will NOT be open to the public.
The HMRC Trusts and Estates Newsletter: April 2017, outlines the requirements in more detail and I’d recommend having a look through that in full to get a more comprehensive view of the changes and the updates you may need to make to your processes.