Even at the current time with uncertainties still surrounding COVID 19 and its impact on the economy, annual tax returns still need to be completed and submitted to HMRC by 31 January 2021 where filed online, or by 31 October 2020 if submitting a paper return. This also applies for trusts and estates.
Trustees are now required to update the trust register, which is the central register that HMRC maintains to keep a record of all tax paying trust’s as required under the EU’s Fourth Money Laundering Directive. There is a specific box on the annual tax return where the trustee is required to confirm that they have either updated the trust register or confirmed that the register is up to date.
In order maintain the register, which is all now done online, trustees are required to set up a government gateway for the trust and then authorise their agent, if there is one acting, to enable their agent to update it on their behalf.
There have been a few teething problems with the system generally. Also it is not the easiest process given the different links that have to be accessed on HMRC’s website , which have to be used in the correct order to enable you to get the authorisation in place, but with perseverance you get there in the end.
We then have a change coming because of the fifth anti-money laundering directive. In its original form, see my blog on 23/09/2019, it meant that many more trusts, even those without a tax liability, would be required to register with HMRC, which imposed unnecessary obligations on trustees.
Whilst still covering non taxpaying trusts, following consultation with the professional bodies, the rules have been relaxed and many of the trusts that previously were included, which are used in financial planning, have now been excluded from the requirement to register, such as those holding life policies written in trust and UK registered pension funds. What is and is not covered is still complex but trustees do have time to get their head around whether they will be caught by the new requirements.
Trusts that meet the registration criteria on 9 February 2022 must register on the trust registration service and provide the relevant information by 10 March 2022. New trusts must register and provide the information within 30 days of the trust being set up and meeting the registration criteria.
My concern is still that this is a lot for trustees to understand and know whether they have to register the trust or not to ensure they meet their annual obligations.
Please contact me if you want to discuss the above further.