HMRC has announced that its online Trusts Registration Service will not be ready for launch this month as originally intended. The online Trust Registration Service, which was covered in detail in our February Bulletin ‘Money Laundering Rules and Trusts’, replaces the paper 41G(Trust) form and the ad hoc process for trustees to notify changes in their circumstances, and will be relevant to any trust that generates “tax consequences”.
The online Trust Registration Service, replaces the paper 41G(Trust) form and the ad hoc process for trustees to notify changes in their circumstances, and will be relevant to any trust that generates “tax consequences”.
As reported in our most recent bulletin on this subject here, HMRC’s new online Trusts Registration Service was due to be launched this month following withdrawal of the paper form 41G (Trust), however, it is understood that the launch, which was intended to coincide with the beneficial owner registration requirements of the EU’s Fourth Money Laundering Directive (4MLD) – transposed into UK law this week – has now been delayed.
The register will allow HMRC to collect and hold adequate and up-to-date trust information centrally in line with the specific requirements of the 4MLD, and will require any new or existing trust that generates a ‘tax consequence’ to provide information on the identity of the settlor, the trustee(s), the protector (if any), the beneficiaries (or class of beneficiaries if the trust is a discretionary trust) and any other persons exercising control over the trust; as well as a detailed picture of the assets held. This imposes a more onerous reporting obligation on many trustees who have until now been exempted from the requirement to complete a 41G(Trust) if there was ‘no income arising, and no likelihood of income or gains in the future’. By contrast, the new requirement to register or update trust details online applies in any year that the trust generates a UK tax consequence of any kind – this could be an income tax, CGT, IHT or SDLT implication.
Trusts that hold collectives will have needed to register under the previous system and for these trusts little more will change other than when and how the information is provided. For trusts that hold no assets other than onshore or offshore bonds life insurance investment bonds, the new rules will presumably mean that online registration will not be required unless either a chargeable event arises or a chargeable occasion for IHT occurs – however, the position is not yet completely clear.
The requirement to register will apply to both onshore and offshore trusts, however bare trusts, where any tax liability that arises, arises to the beneficiary rather than to the trust, are excluded from reporting.
Until the Trust Registration Service is available, HMRC have asked customers to delay notification of new trusts. In the meantime, those completing Trust and Estate Tax Returns have been instructed by HMRC to leave the box that asks for confirmation that ‘changes to the trust have been updated on the Trust Register’ blank, with a view to ensuring that correct details are recorded on the register when it is up and running. Once the service is operational, trustees will have until October 5 this year to register new taxable trusts and until January 31 2018 to provide information on existing trusts.