£5,000 fine if you’re in hot water with HMRC and don’t even know it?

Three common scenarios that require registration with the Trust Registration Service (TRS) established by HMRC that you may have missed.

If you are a trustee of a UK Trust, or a non-UK Trust with UK connections, you are required to register your Trust with the Trust Registration Service (TRS) and keep it updated. The TRS acts as a central register of Trusts in the UK and was introduced to tackle money laundering, tax evasion and other financial crimes, by making it more difficult for Trusts to be used for dishonest purposes.

You would be forgiven for thinking it is easy to know whether you have a Trust and must, therefore, register with the TRS. However, as will be evident from the following (non-exhaustive) examples, it captures other structures which you might not necessarily realise require registration.

1. Land or property where the registered names at the Land Registry do not exactly match those who have a share in the property. For example:

  • A property is registered in individual’s name but there are other people who have an interest in the property who do not appear on the records at the Land Registry.
  • A Declaration of Trust where co-owners have split the ownership and income between them.
  • Parents have contributed a deposit towards a property purchase for a child and they are entitled to a share of the property on sale.

2. Trusts holding investment bonds, usually a single premium life insurance product used to hold investments which have an element of life insurance. 

3. Estates in administration for more than two years, and complex estates, need to register with the TRS.
A complex estate is an estate that has over £10,000 in either income tax or capital gains tax liability, has a value at death of over £2.5 million or the proceeds of any assets sold by the executors in any one tax year is greater than £500,000 for deaths after 2016.Each of the above scenarios require registration with the TRS. Failure to register, or keep the register updated, can result in the trustees personally facing a penalty of £5,000 per offence.

The deadlines for a Trust to be registered vary depending on the type of Trust you are registering.

  • Trusts created on or after 1 September 2022 must be registered within 90 days of creation.
  • Trusts created before 1 September 2022 but on or after 6 April 2021 must be registered as soon as possible.
  • Trusts created before 6 April 2021 must be registered by 31 January after the year in which a tax liability occurred, or by 5 October after the end of the tax year for the first year of liability to income tax or capital gains tax.
  • Trusts that experience a change that triggers a need for registration, for example entering into a new UK business arrangement, acquire a new interest in UK land or a Will Trust that continues for longer than two years all must be registered within 90 days of the event.

The TRS is an online system accessed through HMRC’s website. The registering Trustee will need to set up a Government Gateway User ID and input the details of the Trust in the online form.

While this can be done yourself, you can choose to instruct an agent to register the Trust on your behalf. DMH Stallard would be pleased to assist you with this process. Please contact us and we will be happy to advise further.

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