The new online registration service replaces the previous paper form (Form 41G). Previously, Form 41G was filed only once, generally on creation of a new trust, in order to obtain a Unique Tax Reference (UTR) but this has all changed.
Form 41G was withdrawn on 19 May 2017 and is no longer accepted by HM Revenue and Customs (HMRC). A new online registration service has been available from 10 July 2017, although it is currently only available to individual trustees, and is not expected to be available to tax agents until later in the year. Although this article focuses on trusts, the online service must also be used to register complex estates, for which an income tax or capital gains tax liability is expected to arise during the period of administration.
The information required to be reported to HMRC under the new online service is more extensive than under the old system. Trustees are required to provide the name of the trust, the creation date, and a brief statement of account describing the trust assets. In addition, trustees are also required to provide full details of the settlor, trustees, beneficiaries, and other persons exercising significant control over the trust, including their residential address, tax reference and National Insurance number. Where beneficiaries are identified as members of a class (such as “children of the settlor”), HMRC has now clarified that any living person included in a class has to be identified and their details included on the Trust Register – it isn’t sufficient to refer just to the description of the class.
Trustees are required to maintain accurate and up-to-date records of all the beneficial owners and potential beneficiaries of the trust, and comply with the relevant reporting deadlines. For existing trusts (including those which have previously filed a Form 41G), the first filing deadline will be 31 January 2018, and the register will need to be updated annually thereafter with any changes. For new trusts, registration should be completed by 5 October following the first tax year in which a UK tax charge arises (extended to 5 January 2018 for trusts with an obligation to register this year, due to time constraints with the new system), and the reporting deadline will be the subsequent 31 January. This aligns with the current tax return filing deadlines, and failure to comply with their obligations exposes the trustees to HMRC penalties, or possible criminal sanctions.
Given the personal information required, there is inevitably some concern regarding data protection and the dangers of identity theft. The current regulations allow only HMRC and law enforcement agencies to access the information on the register. However, various EU committees have proposed amendments to allow full public access to registers of trust beneficial ownership. If the EU agreed to these changes while the UK is still bound by EU directives, the UK regulations may need to be amended.
The new reporting requirements are clearly an additional compliance burden for trustees. Although the aim of introducing greater transparency and communication between tax authorities and reporting jurisdictions is understandable, this does not make it any easier to administer trusts and comply with all relevant reporting requirements and deadlines in the modern world. As ever, any trustees unsure of their obligations should take appropriate advice to ensure they comply with the law.