Trust registration service filing deadline – update at December 2017

As reported in our news item the deadline for registering an existing trust with a tax liability in 2016/17 is unmoved at 31 January 2018 but no penalties will be charged if the trust is registered before 5 March 2018. 

Many agents do not think the relaxation of penalties is a help; when trustees engage agents to do work on their behalf there is an expectation that the agent will be compliant with the legislation, not just that the filing will not attract a penalty. The engagement letter generally says that the client must be compliant and it is only late information from the client that can excuse non-compliance in terms of filing deadlines. Lack of time due to unavailability of the system provided by HMRC is not a reason for non-compliance. 

We asked HMRC why they had chosen to relax the penalty but not extend the deadline: was it simply for expedience to save amending the statutory instrument which fixes the 31 January deadline? 

The response from HMRC is: 

“The objective here is to allow trustees to submit registration after 31 January 2018 without being penalised by HMRC and this can be achieved within the existing legislative framework. A trustee or an agent, acting on behalf of trustees, submitting registration after 31 January 2018 but by no later than 5 March 2018 will in our opinion still be compliant with the legislation given our announcement below. 

“Important information regarding the Trusts Registration Service

The Trust Registration Service (TRS) is an important tool for the UK government in meeting its obligations to tackle money laundering and it is important that the register is complete, but it is also important that we enable and support trustees and agents to comply with these new requirements, rather than simply enforce non-compliance. 

We have listened to your feedback about initial difficulties with this new service and the pressures this is placing on agents at a very busy time.  Therefore, for this, the first year of operation only, HMRC will not impose a penalty on the trustees of taxable relevant trusts if the trustees, or an agent acting on behalf of the trustees fail to register on TRS by 31 January 2018 but do so no later than 5 March 2018. This applies for both trusts which are already registered for Self-Assessment (SA) and those which do not require to be registered for SA. 

“We recently announced an extension to the Trusts Registration Service (TRS) deadline for new trusts that need a Unique Taxpayer Reference for Self Assessment. Trusts which have incurred a liability to income tax or capital gains tax for the first time in the tax year 2016 to 2017 will need to complete registration on the TRS by no later than 5 January 2018. This extension continues to remain in place for both trusts and complex estates, and is for the first year of the TRS only.” 

Based on this explanation the trustees and agents will still be compliant provided they register on or before 5 March 2018.