TRS and s34(2) LPA 1925 trusts of land

Trusts Discussion
1

Dear all

I am wondering if anyone has come across the circumstances in which I find myself and might have guidance as to how they proceeded (or were instructed to proceed by HMRC).

I am acting for the beneficiaries of several parcels of land. The land is to be held by five family members, meaning that a s.34(2) trust of land is created, so that only four of the five can be named as legal owners.

HMRC’s TRS manual is clear, at TRSM23140, that trusts of land imposed by statute do not require registration.

The issue in this case is that the family are keen, if possible, to have only two of the five family members named as legal owners. What I have not been able to determine is whether that then triggers the need for a TRS registration. So far as I have been able to deduce, there is no definitive guidance on that.

My instinct is that HMRC would argue that voluntarily reducing the number of legal owners below four will mean that s.34(2) is not engaged and so a TRS registration is required. I am not entirely sure that is correct, but am leaning towards advising that the trusts be registered nevertheless.

However, if anyone else has encountered these circumstances and has any definitive guidance, that would be much appreciated.

Many thanks

2

My understanding is that if only two are named as legal owners TRS applies for the reasons you have given

3

Many thanks, Nigel. I think we will have to proceed on that basis but hopefully HMRC might be able to provide specific guidance on this in due course.

4

Patrick, I think HMRC will say their guidance in TRSM23140 confirms the exclusion only applies if you reach the max number of legal owners, i.e. 4, and not if you voluntarily reduce that number. So I agree with your instincts, you must register.
I’d go on to say, if you have 4 legal owners and one dies, you have 90 days to transfer to a full 4 legal owners (at least make your application to the Land Registry, then covered by para 15 exclusion) or you must register that trust on TRS, as the exclusion is lost on death. Subject to whatever changes come from the latest con doc!

5

Thank you, John, for your very helpful response.