Charities will need to check where they stand in relation to the Trust Registration Service (TRS) rules and whether they need to take action.
This will affect any charitable trusts that are not currently registered with HMRC under the TRS, including trusts which are non-taxpaying, may be dormant, or whose funds are administered by another charity. Being registered with HMRC as a charity does not count as being registered with the TRS.
The EU’s fifth Anti-Money Laundering Directive (5 AMLD) is due to come into force in UK law by 10 January 2020.
HM Treasury issued a consultation document in April 2019, proposing how they would implement this directive, and including the requirement for all express trusts (and all charitable trusts) to register with HMRC’s Trust Registration Service.
A number of responses pointed out that this would require the registration of thousands of small, and possibly dormant, charitable trusts that are already registered with and regulated by the Charity Commission. A further consultation in October 2019 was expected, but nothing has been published yet; in the absence of further discussion it is likely that the legislation will go ahead in accordance with HM Treasury’s proposals.
Currently, all express trusts that incur a UK tax consequence i.e. that have a liability to pay any:
must register on the TRS. Charitable trusts with no tax liability are not currently liable to be registered.
However, under HM Treasury’s proposals, the following types of trust will also have to register, regardless of whether or not they have a UK tax liability:
Express trusts are those whose terms explicitly state that they are a trust, which will include all charitable trusts as they are either set up by will or by trust deed.
For those unregistered trusts already in existence on 10 March 2020, the government proposes a deadline of 31 March 2021 for registration. For trusts created on or after 1 April 2020, the government proposes that the trust should be registered within 30 days of its creation.
Trustees who are required to register must do so online:
Alternatively the Trustees can appoint an agent to carry out the registration process for the trust:
The TRS will normally ask for:
Trustees who breach the regulations by failing to register risk both civil and criminal sanctions. The more detailed technical consultation is due to include consulting on a new penalty regime for late registration under the TRS.
We would urge you to check the potential need to register any trusts not already on the TRS and please do get in touch if you need any help or any further clarification.
If you need help with the registration process we can assist.