Under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017), Trustees of UK Trusts are required to maintain accurate records of Settlor(s) (i.e. the person who set up the Trust), Trustees, individual beneficiaries and potential beneficiaries of a Trust. Trustees have a duty to record the following information:
Where beneficiaries are identified as a class (for example 'grandchildren'), without being identified by name in a Trust Deed or Letter of Wishes, Trustees can disclose a description of that class of beneficiaries rather than each individual beneficiary’s name and personal information. However, where a beneficiary receives a benefit from the Trust in a relevant tax year, the name of the beneficiary and the above information must be disclosed.
Where a Trust in a relevant tax year is liable to pay income tax, capital gains tax, inheritance tax, stamp duty land tax, land and buildings transaction tax or stamp duty reserve tax, Trustees must disclose their records to HM Revenue & Customs. Reporting is carried out using the online Trusts Registration Service. The above information must be disclosed to HM Revenue & Customs plus the following:
First registration of Trusts with tax liabilities was required by 5 March 2018. If this deadline has been missed, HM Revenue & Customs will charge a fixed penalty to reflect the period of delay:
Trustees are obligated to update HM Revenue & Customs on an annual basis. This means they must disclose changes to the above information or confirm that they are not aware of any information having changed. The annual update must be provided on or before 31 January after the tax year in which the change occurred. However, if the trust is not taxable in that period, the deadline is 31 January after the tax year in which the Trustees are again liable to tax.
The upshot of the above is that Trustees are obliged to keep accurate records of Trusts and to keep such information under review so as to ensure they do not miss tax liabilities and the necessary reporting requirements to HM Revenue & Customs.
Ashfords have a dedicated Trusts team who are able to assist Trustees with the review of Trusts in order to establish accurate records, register Trusts using the online Trusts Registration Service and report necessary information to HM Revenue & Customs when required. Please contact Sue Knowles for more information.
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