HMRC - Burdensome rules on registration of trusts

The new registration rules are due to come in from July I believe. I have seen some guidance which states as follows:

“Detailed information will need to be gathered on the trust and all parties to it - i.e. the settlors, trustees and beneficiaries. Previously when notifying HMRC of the creation of a trust (the paper form 41G, now withdrawn), beneficiary details were not needed.
The new trust register requires the details of all beneficiaries including potential beneficiaries, even though they may never benefit. Where a class of beneficiaries has been used, such as the children of Joe Bloggs, a description of the beneficial class is sufficient. However the address, National Insurance number or tax payer reference of any named beneficiaries, including anyone specified in a letter of wishes, will be required. And passport details are needed for any individuals who are non-UK resident.
In addition, the trustees will also be required to provide the details of any adviser who is being paid to provide them with tax, financial or legal advice.”

Do others feel that this is a gross intrusion into the nature of discretionary trusts in particular, and promises a huge administrative burden ( a bit like FATCA all over again)?

Lisa Davies

1 Like

Frankly yes, but as HMRC have appeared to be unable to justify what a trust is, namely a concept of property law, not of contract to their friends in the OECD and elsewhere, this is now what is needed in the new world order.

It is not just intrusive, it is in fact existentially irrelevant. It is not prepared by lawyers, but by civil servants.

The requirement to provide the name of those providing legal advice to the trustee is particular corrosive of legal professional privilege.

Even the French do not require that on their supposedly transparent Register.

This is not more and no less that the implementation of the OECD treat of some three years ago.

This is being done without any real Parliamentary consideration other than a nod in passing.

You mention FATCA, can I reiterate a point which I made previously, namely that the English trust of land since the abolition of the equitable doctrine of conversion, is no longer technically a trust from the viewpoint of the Hague Convention as that doctrine was the basis upon which the civil law jurisdictions present were able to grasp the overall concept and accept its assimilation by recognition.

I have not yet seen any admission by HMRC that they are now in effect requalifying the definition of land ownership within the English jurisdiction for international purposes.

The response will doubtless be of the style, well now everyone know who “owns” what, or who will own what in the next generation. I repeat that the underlying reason for the French register being declared unconstitutional was that testamentary style dispositions, which could be changed benefited from absolute privacy for basic public policy reasons.

Our common law right to absolute confidentiality as reinforced in the case of Ingenious has just been yet effectively overturned by HMRC in an international forum.

We are rapidly moving to a point where there is a need for a constitutional court in these Islands to prevent increasing administrative abuse by reference to half understood and unexplained “international” norms.

Rant over.

Peter Harris


Can one of you point me to the most recent official consultation / guidance / actual Regulations or has it been dropped?

David Ainslie
Pitmans LLP

This is part of the general OECD umbrella compliance to which the UK government has subscribed the professions.

It is unlikely to be dropped in principle, although it may perhaps be modifiable provided and to to the extent that the lawyers can get involved in ensuring that trust law as such is respected. Rather than it being overridden by fiscal policy and the inevitable fiscal fictions which accompany it .

Peter Harris

The Regulations were due to be enacted by the Directive deadline of 26 June but will likely be delayed as a result of the election. Absent any major changes arising from the consultation (which seems unlikely), I would expect the SI to be laid shortly after Parliament restarts.

Andrew Goodman
Osborne Clarke LLP

Many thanks Peter.

I cant imagine it will be dropped but it sounds as though there is no firm detail yet and end of June start date is unlikely

I served on a Treasury working party in early 1990s for intro of AML and some other Directives and was able to influence wording slightly – an interesting experience

David Ainslie
Pitmans LLP

What is of some concern is the situs of the trust for these purposes.

The Register of Beneficial Ownership section at §44 introduces probably the least precise definition of residence imaginable:

(2) The trustee[?s?] of a taxable relevant trust must, …, provide the Commissioners with—

(a) the information specified in paragraph (4) in relation to the trust;…

(3) The information required under paragraph (2) must be provided in such form as the Commissioners reasonably require.

(4) The information specified in this paragraph is— …

(d) the country where the trust is considered to be resident for tax purposes;

Considered by whom?

Whilst this is all within the context of UK Taxes as defined in the Regulation, the fundamental concept of trustees being no more than a body of persons at law appears now to have morphed, by EU and OECD jargon of convenience, into a trust as a form of organism independent of the trustees holding the property subject to the trust itself. The Supreme Court’s excellent summary in Akers v Samba of what a trust is, namely as being impressed upon property, as opposed to some corporate contractual mechanism has evidently eluded the attention of the draftsman. I hesitate to turn the knife in using the term “avoid” or “evade” in this context.

It is a matter of concern that the EU should on the eve of Brexit have such an inordinate and perverse influence over the very basic definitions of our property laws.

Whilst those following the elucubrations of the unlearned non-lawyers at the OECD grappling manfully or otherwise with a concept beyond their ken or civilian wits, the point is that a trust as such is not a legal entity with any form of legal personality except in exceptional civil law states such as Louisiana, whose property laws would not otherwise function on a full faith and credit basis with the remainder of the US without it.

Would it be too much to ask that the Commissioners in the jurisdiction of origin of the trust concept at least exercise their powers in terms concordant with our property laws, i.e. of trustees rather than a “trust” as such?

There is no room for informal laxity in this context whatsoever. The term of convenience “trust” has come “home” to roost as a cuckoo, not as a returning migrant.

Peter Harris

…and yet a trust does have a residence, namely the residence of its trustees. I haven’t looked this up for some time but I recall it has a potential residence for income tax, one for CGT and one for IHT, and there is no necessary conjunction. One depends on the habitual residence of the trustees (all of them), one on the residence of the majority of the trustees, and one on some other criterion. I believe Tolley gave a good analysis.

Julian Cohen, Solicitor

Quite, Julian, that is my point.

The “residence” is not defined by reference to a fiscal fiction or “entity”, but rather the trustees owning the property upon which the trustees responsibility is impressed .

To the Treasury such “niceties” are irrelevant.

Henry VIII had a similar "use"less approach.

Peter Harris