Trust Registration Service | extension to non-tax paying trusts

The Trust Registration Service (TRS) was introduced by HMRC in 2017 as part of the UK's implementation of the Fourth Money Laundering Directive.

For companies operating employee benefit trusts (EBTs), the obligation to register has historically applied to trusts that incur a UK tax liability. This means that many offshore EBTs have not needed to register.

However, the position has changed (as required by the Fifth Money Laundering Directive) and the TRS is being extended so that non-tax paying trusts also need to register and provide specified information (including details of the beneficial owners of the trust).

As set out in our Insight, the changes were originally due to take place last year. HMRC has been experiencing IT issues in modifying the TRS system to enable the registration of non-tax paying trusts, which has led to further delays.

HMRC provided an update last month in its Agent Update: issue 83.

HMRC now expects the TRS service to be open for non-taxpaying trust registrations by Autumn 2021 (rather than Spring 2021). HMRC will be extending the original legislative deadline (March 2022) to provide trustees and agents with approximately 12 months from the date that the expanded service is available in which to register.

In the meantime, HMRC has updated its initial guidance on the extension of TRS to non-tax paying trusts. This includes an overview which gives:

• details of the non-tax paying trusts that are required to register;
• details of the non-tax paying trusts that are not required to register (this summarises the narrow exclusions); and
• information that will be needed to complete the registration.

The trustees of EBTs and employee ownership trusts will need to register when the expanded TRS service is made available by HMRC. Other trust arrangements that are within scope will also need to be registered.

HMRC will publish further updates and guidance and confirm the final deadline in due course, and we shall cover developments in future Insights.

Please get in touch with your usual Osborne Clarke contact or one of the experts below if you have any queries or would like to discuss further.