Trust registration service: technical consultation

HMRC has invited views and evidence on a consultation including draft legislation covering its proposals to expand the trust registration service (TRS) to comply with the EU’s Fifth Money Laundering Directive.

In April 2019, the government held a consultation seeking views on transposing the 5th Money Laundering Directive into national law. The consultation ended on 10 June 2019 and the response was published on 23 January 2020.

The government is now holding a detailed technical consultation on extending the TRS. The consultation and draft legislation cover among other things the types of express trusts that will be required to register, data collection and sharing, and penalties. The government says that it is keen to ensure that the UK’s anti-money laundering and counter terrorist financing regime effectively deters such activity while remaining proportionate.

The consultation proposes that some trusts will out of scope for registering with the TRS, but should they become taxable then they will need to register. Examples include:

  • Statutory trusts arising on intestacy.
  • Tenants’ service charge contributions protection trusts.
  • Ownership trust solely for the purpose of jointly owning a home with a partner, relation or friend or where two or more people co-own an asset, for example, a bank account or shareholding.
  • Some express trusts established in a specific form eg,
    • maintenance fund trusts for historic buildings
    • approved share option and profit-sharing schemes
    • vulnerable beneficiary trusts
    • personal injury trusts.
  • Trusts to hold life insurance policies, income protection policies or policies solely for the payment of retirement death benefits which are a pure protection policies and payment is not made until the death or terminal illness of the insured.
  • Pension scheme trusts that are registered with HMRC on ‘Pension Schemes Online’ or ‘Manage and Register Pension Schemes’.
  • Charitable trusts.
  • A trust already registered in another EU member state.

As to bare trusts, the government will consider them in the light of representations as part of this consultation.

This consultation closes on 21 February 2020 and the Tax Faculty intends to respond.