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Trustees of both UK resident trusts and offshore trusts that have UK tax liabilities on UK source income or certain UK assets may need to register. Registration is required for all ‘taxable relevant trusts’.
Only express trusts fall within this definition. An express trust is generally one that the settlor deliberately creates, transferring property to a trustee. You do not need to register a bare trust.
A taxable relevant trust will only include a trust in any year in which its trustees are liable to pay any of the following taxes in the UK in relation to assets or income of the trust:
Where relevant trustees are chargeable to income tax or CGT for a year of assessment, and have not received a notice requiring a return, they have an obligation to notify an HMRC officer that they are chargeable. The deadline is usually 5 October following the end of the tax year. HMRC agreed to extend the deadline the first year to 5 January 2018.
Going forward, trustees will need to use the Trusts Register for this notification purpose and this is also the only way to obtain a Unique Taxpayer Reference.
In all other cases where there is a requirement to complete the register, the deadline is 31 January 2018 after the end of each tax year, although for the first year HMRC has said it will not impose a penalty on the failure to register existing trusts on the TRS by 31 January 2018, nor treat as non-compliant, providing this is done by 5 March 2018.
Significant information and documentation is required and we have not provided complete details below as this note is only intended to provide an overview of the new rules.
The rules are drafted very widely; for example, as well as details such as the identity of settlors, trustees, beneficiaries and classes of beneficiaries and any individuals with control over the trust, the regulations also require details of ‘any other individual referred to in any document such as a letter of wishes relating to the trust’.
Specific information is also required about the trust itself, including a requirement to provide a statement of accounts for the trust, describing the trust assets and identifying the value of each category of the trust assets (including the address of any property held by the trust). The value is the historic value when the trust was first settled, although for existing trusts HMRC has provided some relaxations.