New Regulations for Trustees

The Government will bring into legislation rules which will still mean greater transparency, and bureaucracy for Trusts.  

Up to two million trusts had been required to be registered on a Government list from March this year, under the terms of an EU directive, designed to tackle money laundering, of which we are still subject to. 

Under the new incoming rules, nearly all trusts were expected to register on the list, not just when they have tax liability, as currently. In other words, that income is received into the trust. The changes will also open up information on the register to a wider range of people. 

Even though we have now left the EU, the Government enacted the directive into domestic law in December. 

A technical consultation released on January 24th, proposed excluding all Joint ownership, Personal Injury, Charitable and Vulnerable Beneficiary Trusts.  

It was also suggested excluding Shareholder Protection Policies, Pensions Schemes, Trusts which hold Life Insurance Policies, and Statutory Trusts (such as those arising out of Intestacy).  

However, trusts created as a result of wills, are to remain subject to the new rules. 

The consultation also proposed delaying by a year, the deadline by which Trusts in existence on March 10th have to list on the Trust Registration Service (TRS) – to March 10th 2021 

Trusts set up after March 10th this year, must register within 30days, or by March 10th 2022, whichever is the later. However, trusts set up after March 10th 2022 would have to register within 30days of creation. 

There is some confusion on the part of the industry, for example of the 30-day period for registration of new trusts, maybe impossible to meet if the trust was created by a will. Since the trust arises on the date of death from an Inheritance Tax point of view, and professionals are rarely instructed in the estate within 30days of death. 

This would also be very applicable to non-professional trustees, especially as they are unlikely to know the rules, and especially when they could face penalties. 

The consultation proposes that penalties will apply to trustees for failing to register a trust or – once the trust is registered – failing to update the TRS with the relevant information. 

It has been suggested that there will be no penalty for an inadvertent failure  register, instead the Tax Office (HMRC Trust Office), will send the trustees a letter reminding them of their responsibilities. 

For each subsequent failure, or deliberate failure to update the register, the proposed penalty is £100.  

Without doubt this will add to the administrative burden on Trustees. 

In some instances, where determining whether a trust will be registered will be very complex. However, we believe that the correct position is, if in doubt register. 

These provisions are evidence that it is further work to counter money laundering, or terrorist financing activity. Under the terms of the directive, access would have been granted to anybody with a legitimate interest’. 

The new consultation rules state that for the legitimate interest requests, information will need to be submitted, that substantiates the suspicion that the trust has been used for money laundering or terrorist financing. Hopefully, this will prevent scurrilous request. 

Technically the consultation is open until February the 21st, responses should be sent to ‘ 

If any advice is required, please do not hesitate to contact us.