In March, HMRC confirmed what the penalties would be for Trustees who do not register a Trust before the deadline.
The Trust Registration Service
The Trust Registration Service (or TRS) was introduced in response to the new Anti-Money Laundering Regulations 2017 and to replace the form 41G which was previously used to notify HMRC of the existence of a new Trust and obtain a tax reference number. The TRS allows HMRC to collect significantly more data than they would have done on form 41G about those involved in the Trust. A move towards making tax digital and greater transparency about Trust and tax affairs.
Once a Trust has been registered, the Trustees are obliged to keep the register up to date and amend details where appropriate.
The TRS is an online service, accessed through an account set up with HMRC. Its introduction was not plain sailing: technological issues, conflicting guidance, and a lack of trained staff within HMRC to deal with enquiries has meant that the TRS has struggled to its feet. Even now, the facility to update the register and amend details is not available
Deadline for Registration
New Trusts were required to register with HMRC by 5 January 2018 and existing trusts which paid tax in 2016/17 were required to register by 5 March 2018, even though they had already registered with HMRC using a 41G.
From now on, the deadline for registering new Trusts will be 5 October following the year in which the Trust first paid tax – for example, if the Trust first paid tax in 2017/18, then they should register by 5 October 2018. Existing Trusts should register by 31 January following the year in which tax was paid.
HMRC has confirmed that penalties can be charged for:
- Failing to register the trust using the TRS by the due date of 31 January; and
- Failing to notify HMRC of any change of information by the due date of 31 January.
The penalties are usually a fixed sum and reflect the delay in registration:
- Up to three months from the due date - £100 penalty;
- Three to six months from the due date - £200 penalty; and
- More than six months from the due date – the greater of either 5% of the tax liability or £300.
HMRC has indicated that it will take a pragmatic approach to the penalties and will not impose penalties where it is clear that Trustees have taken reasonable steps to comply with the registrations. Of course, as the facility to update the register does not yet exist, penalties will not be imposed.
If you have any questions in relation to trusts, or are struggling to use the TRS, contact the Private Client Team on 01865 244661 and we will be pleased to assist you.