HM Revenue & Customs last week revealed details of its beneficial ownership register for trusts, with a deadline of 5 October this year for new trusts to register and for information on existing trusts to be provided by 31 January 2018.
Thereafter, the register will need to be updated once a year, as a minimum, by the end of each tax year, in each year that the trust generates a “UK tax consequence”.
The register will not be public at this stage, but access to the register will be granted to various authorities including the National Crime Agency and Financial Intelligence Units in the EEA states.
It forms part of the UK government regulations implementing the European Union’s Fourth Money Laundering Directive, which came into effect on 26 June.
Karen Clark, tax partner in charge of the London private client team at RSM, said: “It is the responsibility of the trustees to update the register but, clearly settlors, beneficiaries and others will need to inform the trustees of relevant changes, and for some trustees there will be a huge amount of information to gather.
“While most professional trustees will have systems in place to collate the data and ensure the register is updated, there are numerous trusts with no professional trustees who have little time to comply if they are even aware of their obligations.”
RSM’s briefing notes explained that all express trusts with UK tax consequences will have to register. An express trust is one that was deliberately created by a settlor expressly transferring property to a trustee for a valid purpose as opposed to a statutory, resulting or constructive trust. Most bare trusts will not need to register.
A UK tax consequence will arise if the trust incurs UK liabilities for income tax, capital gains tax, non-resident capital gains tax, inheritance tax, SDLT or SDRT.
Therefore, UK resident trusts with UK tax liabilities will be required to register, as will trusts resident outside the UK which have a UK tax liability.
Trusts can fall into and out of the duty to register each year, depending on their tax situation.
Contracts, wills and testaments will not need to register automatically but only if they create an express trust which generates a tax consequence.