Legislation Update April 2023
TRUST REGISTRATION – PROVIDER DISCREPANCY CHECKS
As we know, as part of the UK’s implementation of the fifth EU Money Laundering Directive, all UK Express Trusts must be registered on HMRC’s online Trust Registration Service (TRS) unless they are exempt. All Trusts that are liable for UK tax are also required to register.
Since 1 September 2022, the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2007 (MLRs) have required ‘Relevant Persons’ (including financial institutions, accountants, tax advisers, legal professionals, estate agents and trust providers) to obtain proof of registration when they enter into a ‘new business relationship’ with the Trustees of a Trust. There is also a requirement for them to report any material discrepancies between the information they have about the Trust and the details on the Register.
From 1 April 2023, an amendment to the MLRs has expanded these obligations to require a TRS review and discrepancy reporting on an ‘ongoing basis’. This would include when there is a transaction that triggers enhanced due diligence checks and whenever there is a change to the Settlors, Trustees or Beneficiaries.
What this means for you and your clients
Providers of investments in Trust will now require proof of Trust Registration, not only when the funds are first placed into Trust but whenever there is activity on the Trust such as a full or part surrender, a claim on death or regular withdrawals are set up or changed.
Trusts that are just wrapped around life insurance policies are usually exempt from registration but after the policy pays out on death, or if it is surrendered, it will become registrable and Providers will want to see proof that this has been done before they release funds.
Proof of registration will also need to be provided e.g. if you open a Trustee bank account or make large deposits or withdrawals from an existing Trust account, if you transfer a property into Trust or sell a property that is held in Trust etc.
How is proof of registration provided?
If clients have signed up for the Solidus ’24-month Trust Registration Service’ and completed the Digital Handshake procedure to authorise us as their Agent, we can download a Proof of Registration (PoR) document from the online TRS for them.
If Solidus has completed initial registration only for the Trust, the Lead Trustee will receive a Unique Reference Number (URN), or Unique Tax Reference (UTR) if it is a taxable trust, from HMRC through the post within 15 working days.
They will then need to set up an ‘organisation’ Government Gateway account for the Trust (they cannot use an existing personal or business Government Gateway account) and follow the steps on the TRS to ‘claim the Trust.’ https://www.gov.uk/guidance/manage-your-trusts-registration-service
Once the Trust has been claimed, there is an option within the TRS to download a PoR document which can then be saved and emailed to the Provider.
If Trustees registered their Trust themselves they would have already set up a Government Gateway account in order to register the Trust so they should be able to log straight in to the TRS to download the PoR, using this account and their URN or UTR.
What happens if the Provider notes a discrepancy?
If the details on the Proof of Registration do not match the details that the Provider holds for the Trust e.g. a Beneficiary that they are being asked to pay out to is not named or the Trustees do not match the policy holders, they will usually contact the Trustees and ask them to update the Register and provide an updated PoR within an agreed deadline.
If Trustees do not update the Register in a timely manner or if the Provider believes that the discrepancy could indicate money laundering activity, they are required to report the discrepancy to HMRC.
Keeping the Trust Register up to date
It is therefore more important than ever for Trustees to ensure that the details on the Trust Register are up to date.
The MLRs require Trustees to update the Trust Register within 90 days of them becoming aware of a change of details.
Changes that will trigger an update to the Trust Register include:
- The Lead Trustee changes their address, telephone number or email
- A Trustee is removed or added
- A Settlor, Trustee or named Beneficiary dies or loses mental capacity
- Someone who was not named as a Beneficiary (ie they were previously just part of a class of Beneficiary) starts benefitting from the Trust
- The Settlors, Trustees or Beneficiaries change their country of residence or nationality
- A non-taxable Trust incurs a tax liability
Additional information will have been provided for Taxable Trusts so Trustees should ensure that if any of these details change the Register is updated. If nothing has changed, they will need to complete an annual Declaration to confirm this and they will not be able to submit their self-assessment tax return until this has been done.
CHECKLIST FOR TRUSTEES
- Ensure your Trust is registered or that you know it is exempt from registration
- Make sure you have a record of your URN or UTR
- Make sure you have set up an ‘Organisation’ Government Gateway account and claimed the Trust
- If you want an Agent to maintain your Trust Register for you, ensure you have completed the Digital Handshake procedure
- Review your last Trust Registration Declaration and ensure all details are still correct
Further guidance
HMRC Trust Registration Manual section on Discrepancy Reporting – https://www.gov.uk/hmrc-internal-manuals/trust-registration-service-manual/trsm70000
Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2007, Regulation 30A https://www.legislation.gov.uk/uksi/2017/692/regulation/30A
Provider updates –
Zurich – https://www.zurichintermediary.co.uk/advice-matters/trust-registration-service-changes
Canada Life – https://www.canadalife.co.uk/technical-support/trust-registration-service/
