Trustees who missed the September deadline to comply with the expanded scope of the Trust Registration regime have been thrown a lifeline by HMRC, with the news that penalties will not be imposed on those who missed the cut-off date through ignorance.
Introduced as part of the UK’s implementation of the Fifth Money Laundering Directive, the new rules are designed to counter terrorism and money laundering, with improved transparency on the ownership of assets held in trusts. They extend the scope of the trust register to all UK express trusts and some non-UK trusts, regardless of whether they pay tax.
Some trusts are excluded, in situations where they have a limited purpose and the structure is unlikely to be used for money laundering or financing terrorism, but generally more trusts are required to register, including UK resident trusts without UK tax liabilities and most bare trusts.
And for taxable trusts, more information has to be provided about beneficial owners, including the settlor, trustees, beneficiaries, and other parties who exercise control over the trust. This includes the name, month and year of birth, country of residence, nationality and details of their beneficial interest in the trust. The record on the register must be kept up to date with any changes notified within 90 days of taking place.
David Lea, Partner in our Private Client department said: “The easing by HMRC means penalties are unlikely to be imposed for those who missed the September deadline, unless they were acting deliberately. But the clock is ticking for all trustees to ensure they comply with the new requirements if they are to avoid potential fines, which can be up to £5,000 per trust."
"If you are involved in a trust and are not aware of any action having been taken, or are unsure whether you need to comply, it really is time to act swiftly and get specialist advice.”
A trust is a way of managing assets such as money, investments, land or property, by the formal transfer of the assets to a trust fund, administered for the benefit of others.
The person who puts assets into a trust is the ‘settlor’ and the ‘trustees’ manage the assets in the ‘trust fund’ on behalf of the ‘beneficiaries’ who will benefit from the assets. Different types of trusts are taxed differently and HMRC has a guide to the different types. For more detailed information on Trusts and Inheritance Tax, click here to read more or to listen to our latest podcast.
Common reasons for setting up a trust include when someone is unable to manage the assets themselves, because they are too young or may have become incapacitated. A trust can also be used to protect family assets, or to pass on assets whether before or after death, allowing the settlor to set out how they wish the assets in the trust to be used or distributed. Common situations may be to provide for a spouse after death, while protecting the interests of any children, or to manage succession planning in a family business.
They are particularly useful when planning how money and assets should pass from one generation to another, especially when family structures are complicated by divorces and second marriages.
The trustees are responsible for managing the trust, making investment decisions and paying taxes, while fulfilling the objectives set out for the trust by the settlor.
Setting up a trust is a specialist area where professionals will generally be involved, to provide guidance and advice on the most appropriate route. Further useful reading on the topic is available at the Society of Trust & Estate Practitioners (STEP) and HMRC.
Our friendly and experienced Private Client team are on hand to advise on any issues relating to Trusts and Estate planning. Please telephone 01892 526344 or email enquiries@berryandlamberts.co.uk.
For further information on all our Private Client services, please click here.
If suitable, we can offer an initial one hour appointment with a solicitor for a fixed cost of £100 + VAT, giving you the opportunity to discuss your matter and consider your options. This can be in person, via telephone or video link. Please get in touch if you feel this type of appointment would be beneficial.
The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.
