TRSM has been amended so that now “Potential beneficiaries may include individuals referred to as such in documents from the settlor relating to the trust such as a letter of wishes”. What if the non-binding LOW describes as beneficiaries that might be added the Chancellor of the Exchequer and; or the current employees of the Bank of England or Mr V V Putin? I intend to amend my own.
Jack Harper
Can I suggest not Putin given the UK and EU sanctions? Knock yourself out with the others though.
I foolishly misdirected myself here. I made the ridiculous assumption that because Reg 45 (2)(d) and (8) did not require reference to a letter of wishes in relation to a taxable relevant trust, with the exception of a request (under Reg44(5), which applies to all relevant trusts), by a law enforcement authority, that Reg45ZA would be identical in that respect. It is not. Reg45ZA(3)(c) requires it but only as regards an individual. This in turn obliges the the trustees to keep up to date any relevant change in a LOW but only if they are"aware of it". A settlor is under no obligation to make them aware of it and the trustees have no right to access a LOW unless it is part of the trust provisions and a Court/the CPR orders disclosure. Presumably HMRC could threaten a penalty and force disclosure or denial.
I am not an sanctions expert but I imagine that simply naming a sanctioned individual in a LOW would not be an offence. The guidance at Russia sanctions: guidance - GOV.UK acknowledges that a designated person may be “a potential beneficiary in a document from the settlor relating to a trust or similar arrangement (such as a letter of wishes)”. Reporting obligations are only imposed on relevant firms and institutions. However all UK nationals can commit a criminal offence by making funds or economic resources available to or for the benefit of a designated person: Regs 10-15 of the 2019 Regs. So actual payment is prohibited.
Regulation 45(9) says that, if a trustee becomes aware that any of the information providedd under Reg. 45(2) (other than that relating to the value of the trust assets), has changed, the trustees must notify HMRC. This information includes details of ‘each of the individuals referred to in reg 44(2)(b) and (5)(b)’,;that is, the beneficial owners of the trust and the potential beneficiaries identified in any letter of wishes etc. Reg 45ZA (6) is in similar terms, as Jack says.
In passing, Reg 45(9)(a) does not require a change in the value of the trust assets to be notified to HMRC, although presumably a change in their nature does have to be notified.
There is no similar exclusion in Reg 45(9)(b). Consequently, as the value of the trust assets will generally change frequently, there will seldom be a need for the trustees to notify HMRC under this head.