HMRC To Allow Temporary Grace Period Following Trust Registration Announcement
Last month, we published a blog about HMRC’s recent announcement for some Trusts to be registered on the Trust Registration Service (TRS) – ‘Trust Registration Service – Does a Trust Need To Be Registered?’
Prior to September 2021, only Trusts which were liable to pay certain UK taxes were required to be registered with HMRC via the TRS.
New rules mean that certain other Trusts need to be registered too (even if there is no tax to pay) and this is so that the Trusts can be stored on an anti-money laundering database and viewed by public parties such as financial firms.
Trusts which did not previously need to be registered are now caught by the new rules. For example, if a Will includes a Life Interest Trust, that Trust will need to be registered if the asset is held for more than two years (which is likely) or the Trust becomes liable for tax. There are strict deadlines to register the Trust and, if the deadline is missed, the Trustees may have to pay a financial penalty.
The new rule is thought to catch out more than a million people, but it has emerged that people are simply unaware that their assets are involved in a Trust, or one that needs to be registered, so the concern is that many Trustees will not register in time.
A new announcement from HMRC says that fines will be waived temporarily for those Trustees who fail to register the Trust in time. But this is only if the failure was not deliberate – Penalties for not registering or late registration will only be charged where it can be shown the failure was deliberate.
Fines will kick in eventually when the new register rules become more common knowledge, although HMRC did not confirm when this will be.
The deadline to register may be as early as 1st September 2022, so it is important for Trustees to know if a Trust needs to be registered.
If you would like any further information or help with registering your Trust, please contact a member of our Wills and Estate Planning department on 01256 320555 or firstname.lastname@example.org