HMRC’s Trustee Registration Service (TRS) began in 2017 and official data collected through a Freedom of Information (FOI) request shows that the TRS has received only 153,241 registrations, with a surge of registration in the early part of 2018 and 79,472 trusts registered in the first 3 months of the year which coincided with the original deadline; only 3,552 trusts have been registered in January this year. Figures suggest that almost 170,000 need to be registered each month to meet the 1st September 2022 deadline.
Presently, only trusts that have a tax liability must report information to the register and under the new rules all trusts (apart from those considered exempt) will need to register by the deadline or within 90 days from the inception of the trust. All trustees will be jointly liable for fulfilling the obligation. The incoming rules were designed to tackle money laundering and it was one of the last EU directives which the UK translated into legislation in 2020.
The reform requires professionals regulated by money laundering regulations, such as accountants, solicitors, and tax advisers, to check a trust is registered on the list before commencing any work.
If trusts do not register, they will face a penalty. Although the penalty regime is still being finalised by HMRC, initial proposals suggest that those who fail to register could face penalties of up to 5% of any tax liability or £300, whichever is greater.
HMRC has confirmed however that it will initially only issue fines for late registration where it is evident that the failure was ‘deliberate’. An HMRC spokesman said: “The requirement to register with the Trust Registration Service is a new one for many trustees, and we anticipate some trustees will remain unaware of the obligation to register once the deadline has passed”.