There is a legal obligation for trustees to register trusts on the TRS. Most express trusts now need to be registered, although there are some exclusions (see below). HM Revenue & Customs (HMRC) will enforce penalties if trustees do not register the trust by the applicable deadline or if trustees do not keep trust details up to date. This article explains what the Trust Registration Service is and provides some guidance on what registering a trust entails.

The Trust Registration Service (TRS)

The TRS is an online register service of the beneficial ownership of trusts. It was set up in 2017 to provide a single system for trustees and personal representatives of complex estates to comply with their reporting and registration obligations under the EU’s anti-money laundering directive. Each EU member state has a similar register aimed at combatting money laundering, serious crime and terrorist financing.

The UK agreed to maintain the TRS as part of the Brexit Withdrawal Agreement, and new rules that came into force in October 2020 via the 5^th Anti-Money Laundering Directive, require all UK trusts and some non-UK trusts, in existence on or after 6 October 2020 to register with HM Revenue & Customs (HMRC) by 1 September 2022. This includes trusts that have closed since that date.

Which Trusts need to register on the TRS?

Previously, only trusts which had incurred a tax liability were required to register with the TRS. However, the main impact of the 2020 rules is to have widened the TRS to ALL UK trusts (including non-taxable Trusts) and some non-UK trusts, unless the trust is specifically excluded.  

For trusts or complex estates that have incurred a tax liability, the TRS is the main route for trustees to obtain a unique taxpayer reference (UTR) to allow a self-assessment SA900 Trust and Estate Tax return to be submitted to HMRC. A trust that has not incurred a tax liability will be issued with a unique reference number (URN) following registration. The UTR or URN will be required in order for trustees, personal representatives, or authorised agents (professional advisers) to access the trust on the TRS to keep the information up to date.

Which Trusts are excluded from the TRS?

Trusts which are perceived as low risk of money laundering are excluded from the requirement to be registered (see Schedule 3A of the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017). This is not an exhaustive list, but some of these ‘excluded trusts’ include the following:

• A trust for charitable purposes which is registered as a charity in the UK
• A co-ownership trust (i.e. property owned as joint tenants or tenants-in-common where the legal and beneficial owners are the same)
• A Will trust that does not hold assets for longer than two years after the deceased’s death (NB Will trusts that pass the two year marker will be have to be registered)
• A trust holding property for a disabled person within the meaning given by Schedule 1A Finance Act 2005
• A trust created by or in order to satisfy the terms of an order of a court or a tribunal
• A trust holding sums or assets of a registered pension scheme which is registered for the purposes of Part 4 Finance Act 2004
• A trust of a life policy or retirement policy paying out only on death, terminal or critical illness, or personal disablement of the person assured (NB this does not extend to investment bonds and discounted gift trusts)
• A ‘pilot trust’ set up before 6 October 2020 which currently holds no more than £100

Please note if a previously excluded trust should incur a tax liability, it will then need to be registered on the TRS. The full list of trusts excluded from registering can be found on the HMRC TRS Manual here.

What are the deadlines for registering a trust on the TRS?

The current deadlines and timescales for the registration of existing or new trusts are as follows:

• Registrable taxable trusts set up prior to 6 April 2021 are required to register by 31 January (or 5 October in some cases) after the tax year in which the trust had a liability to UK taxation (unless they are liable to Income Tax or Capital Gains Tax for the first time)
• Registrable taxable trusts must be updated on an annual basis by 31 January
• Registrable non-taxable express trusts that were in existence on or after 6 October 2020 must register by 1 September 2022
• Non-taxable trusts set up after 1 September 2022 must register within 90 days of creation
• The TRS must be updated within 90 days of the date that the trustees become aware of changes to the trust details or beneficial ownership

The most up to date information on the deadlines and timelines for updating the TRS can be found on the HMRC TRS Manual here.

What information do I need to register a trust on the TRS?

The TRS requires various details, including information on the date the trust was created, on the settlor (the person who settles property into the trust), the lead trustee (this is the person who HMRC will contact if they need to discuss the trust and send all official documents to), the co-trustees, and the beneficiaries. A complete list of what information is needed is available on the HMRC TRS manual here.  

The data on TRS is only available to those who have a legitimate interest, for instance, law enforcement agencies investigating money laundering. HMRC can refuse access where there is a disproportionate risk of exposing the beneficial owner to fraud, blackmail, or intimidation.

Legal responsibility for registration falls upon the trustees, and it is a matter for the trustees to decide and appoint a lead trustee to satisfactorily complete the registration before the deadline.  Alternatively, trustees can appoint an authorised agent, such as Mercers, to do this on their behalf. Our experienced private client team are currently registering trusts on the TRS for our existing clients.

Written by Anouschka Fenley- Paralegal