Trust registrations: the nightmare continues
We are all used to registering trusts with HMRC for self-assessment and many of you will have struggled during the start of 2018 to:
- Identify trusts needing registration on a new Trust Tax Registration Service - all trusts with a UK tax liability, (income tax, capital gains tax, inheritance tax or SDLT) were required to register.
- Collect all the information needed - a long list including full names and national insurance numbers of UK resident trustees, settlors and beneficiaries, addresses and passport details for non-UK residents and details of the assets held in trust.
- Deal with the many teething problems with the HMRC gateway set up for the new Trust Registration Service:
> Difficulties registering for the gateway.
> The need to use the exact trust name and postcode held by HMRC for the trust.
> Providing national insurance numbers, last known addresses and dates of birth for long dead settlors.
> Providing open market values for assets when settled.
Not surprising that one of the first options when you phone HMRC Trusts is for problems with the Trust Registration Service
So why did we need to go through this process and what’s new?
Well this is all to do with anti-money laundering regulation and the first phase was as a result of the EU Fourth Anti Money Laundering Directive. The next phase is in response to the EU Fifth Anti Money Laundering Directive 5AMLD which is set to pass into UK tax law in March 2020. This will extend the requirement to register to all UK express trusts and some non-UK resident trusts, even trusts where there is no UK tax liability such as:
- Trusts holding life policies where there may be no UK tax charge until a chargeable event gain is made.
- Life interest trusts where all income is mandated to the beneficiary and declared on their tax returns.
- Will trusts set up to hold a share in the farm for the benefit of the surviving spouse during their life and the capital protection for their descendants.
HMRC have indicated that the deadline for existing trusts requiring registration under the 5AMLD will be extended to 31 March 2021 but that all new trusts will need to be registered within 30 days.
The time taken to collate all information needed for the registration should not be underestimated, not least the requirement to obtain passport details for minor children beneficiaries who have yet to be issued with national insurance numbers.
Note should also be taken of an amendment to the information requested since registrations first started. The current value of property and land on the date of registration is required and not the original value when first settled. Is this a way of the Revenue collecting information to identify trusts with potential inheritance tax liabilities on ten-year anniversaries?
For those who have yet to register any trusts, a starting point would be to visit the website.