The summer months are usually slightly quieter for the Agriculture team due to our clients being busy with the harvest, but this year we have had more to keep us busy as a result of the requirement that most UK trusts now need to be registered with H M Revenue & Customs (HMRC).
Previously it was only trusts that had a UK tax liability that needed to be registered with the Trust Registration Service, but this has been extended to include all UK trusts. There are a number of exclusions from the requirement to register, which include:
- Co-ownership trusts – this is where the trustees and beneficiaries are the same people, irrespective of the proportions that the property is held in.
- Charitable trusts – UK registered charities are excluded from registration.
- Insurance policy trusts – Insurance policies that are written into trust are excluded from registration although there are specific criteria that the insurance policy needs to satisfy.
A typical example of trusts that now need to be registered are bare trusts, which occur when an asset is held by one person for the benefit of another. This commonly arises with the ownership of property or investments that are being held for other members of the family.
It feels as though HMRC do not fully understand the amount of work involved in registering all trusts but we have been doing what we can to help our clients. Perhaps in recognition of this, in their latest update on 2 August, HMRC has stated that there will be ‘no penalty for a first offence of failure to register or late registration of a trust unless that failure is shown to be due to deliberate behaviour on the part of the trustees’.
As always, if you have a query please contact your usual contact at Ellacotts.
Information for readers: This material is published for the information of clients. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or the firm.