Trust registration service – more guidance from HMRC

Further to our recent posts on the trust registration service (TRS), the Tax Faculty has received more information from HMRC on which trusts need to register and exactly what needs to be entered on the TRS. HMRC has also provided an updated set of FAQs. 

Which trusts need to register

HMRC has clarified a number of points about which trusts need to register: 

  • It is not necessary to register trusts which have received a notice to file a self assessment provided they have no liability to any of the taxes listed in regulation 45(14). The box to tick to say the TRS has been updated can be ignored and left blank. Up to 130,000 trust returns are filed with no tax liability so this may significantly reduce the number of trusts to be entered on the register.
  • It is necessary to register trusts which are required to file a self assessment tax return for the first time for 2016/17 as it is the only way to obtain a UTR to allow the return to be filed.
  • It is necessary to register trusts which have incurred a liability to SDRT (stamp duty reserve tax) or SDLT (stamp duty land tax); this means that the many pension funds and charitable trusts will be required to register even though they have no liability to income tax, capital gains tax or inheritance tax.
  • It is not necessary to register trusts which ended in 2016/17 and whose record has been closed by HMRC following the filing of the return for that year.
  • A non-UK resident trust which does not hold any UK assets or have any UK source income does not need to register.
  • If a tax relief is claimed so that the trustees do not have a tax liability then there is no requirement to register.
  • If all the income of an interest in possession trust is paid directly to the beneficiary then provided the trustees do not have a different tax liability, such as to capital gains tax, then there is no need to register, see trusts and mandated income.


New FAQs from HMRC

HMRC guidance on the TRS was published on 9 October 2017 in the form of FAQ, This has now been updated and draft HMRC guidance was published on 22 November. This is not yet on but the pdf is at the end of this news item. 

There have been a few additions to the guidance, in particular: 

  • The list of which trusts do not need to register on pages 3-4 has been extended.
  • Further explanation has been given for the work-around where details of a settlor are unknown, see page 8.
  • More information has been added in section C on who needs to register where land is owned jointly by two or more persons, pages 10-11.
  • Page 15 includes two new FAQs relating to trusts holding UK assets via a company.
  • There are significant changes in section H, Details of the beneficiaries, on pages 19-21, these changes also flow through to section K, Trust data record keeping and section N, Registering an occupational pension scheme.


Class of beneficiary

One of the controversial aspects of the TRS and an area where advisers were concerned about their ability to obtain all the information required in the timescale is the requirement to enter details of beneficiaries. The concerns centred on broad classes of beneficiaries where HMRC was saying that if the beneficiary could be identified their details should be entered. This applied even if they had not received a benefit. In many cases the beneficiary would not even know they were a beneficiary, so to obtain details from them could at best prove tricky and at worst cause confidentiality issues. 

HMRC has had a rethink and listened to stakeholder feedback and has revised its position: 

  • Where a beneficiary is named on a trust instrument separate from the members of a named class they can be clearly determined and the relevant information must be provided for each named beneficiary.
  • Where a beneficiary is unnamed and is simply part of a class of beneficiaries, the trustees only need to disclose the details of the beneficiary when they receive a benefit, financial or non-financial from the trust after 26 June 2017 the date the regulations came into force. 

In addition, potential beneficiaries, those who only become beneficiaries on a certain contingency, for example the death of a named beneficiary, can be part of a class without being named until the contingent event occurs. 

The new FAQ gives two examples on pages 19-20 to illustrate this change of view.


What next?

We are still concerned about the January 2018 registration deadlines. 

It is now less than six weeks to the 5 January 2018 deadline for registering new trusts and complex estates and just over nine weeks to the 31 January deadline for all existing trusts with a tax liability in 2016/17. But this period includes the Christmas break, likely to be a week and a half for most staff, so the time available is really more like four weeks and eight weeks. 

The 5 January deadline is looking more do-able but the 31 January deadline is more of a stretch and it is likely that many agents will fail to meet the deadline once Christmas holidays and the self assessment filing requirement are factored in. We are in ongoing discussions with HMRC about this and other outstanding TRS issues.

The updated HMRC FAQs are below: