TRS - non taxable trust wound up before 1 September 2022

If a non taxable express trust is wound up before the deadline for registration, does it still have to be registered on the TRS (assuming it is not an excluded trust)?

Diana Smart
Gordons LLP

1 The enabling SI 991/2020 came into force on 6 October 2020 : reg 1(2). Reg 7(3) inserted a new reg 45ZA into SI 692/2017 which had itself come into force on 26 June 2017. The effect was to expand the existing reg 45 register by requiring it to contain additional information about certain non-taxable trusts. This had to be provided on or before 10 March 2022 for a relevant trust existing before 9 February 2022 or within 30 days for other trusts “set up” (or becoming relevant) after that date : reg 45ZA (5).

2 HMG (possibly) and HMRC (definitely) have decided to change these dates by Guidance:
" The deadline for registrations for non-taxable trusts in existence on 6 October 2020 is 1 September 2022.

Non-taxable trusts created after 6 October 2020 must register within 90 days of being created or otherwise becoming registrable, or by 1 September 2022 (whichever is later)."
3 If a trust “first falls within” reg 45ZA before the effective date it is registrable. That effective date is at present 9 February 2022 in law but because HMG and HMRC do not give a fig about the law it seems they have just decided (without troubling Parliament, as it is so busy) that it is to be 1 September 2022. No doubt we may expect more amending bottom-covering law, whether retrospective or retroactive no one is likely to care, least of all Parliament.
4 HMRC have carte blanche over the form of the information to be provided but not its content and most certainly not the date by which it has to be provided, unless they are relying for that just on their “care and management” vires. They have now made up that date to be 1 September 2022 (instead of March 10 2022) because it is a year after the date they “opened” the register. Of course “the” register (under Reg 45) was already long open and the obligation to register a non-taxable trust adhered on 6 October 2020 for trusts then in existence long before any non-taxable trust could actually register.
4 So a trust within 2 above must be registered by the “ipse dixit not presently legal” date of 1 September 2022 whatever has happened to it since 6 October 2020, or if later the date on it was set up, and whether it has since been fully distributed (presumably what Diana means by “wound up”), or become an excluded trust, or has terminated the business relationship or disposed of the UK land that originally obliged it to register. Once a registrable trust always a registrable trust. And the registration details stay on the register for 5-10 years as HMRC have no power to correct or delete them, though this will probably not deter them from exercising such a power if they feel they need or deserve it.
5 It is not clear whether HMRC understand that some trusts must register despite having ceased to exist or having shed their original registrable status or that some like that may well have already registered. As exclusions are constantly being added to, or removed from, or reinterpreted by Guidance (though Schedule 3A changeth not) some trusts will have registered (as per Guidance) when they should not have or failed to register when they should have, a status varying kaleidoscopically almost from moment to moment. Unless of course you naively rely on the law as it is and as you interpret it to be and that it will not be changed (or “clarified”) retrospectively.
6 A legislative and constitutional tour de force or what my legendary Tutor, J G Collier, used to categorise jurisprudentially as “a cock-up de luxe”.
Jack Harper

Jack Harper

1 Like

Thank you Jack. I knew the answer would be there somewhere in the legislation, but lost the will trying to find it.

It will be interesting to see what the real consequences are (if any) for failure to register, given the number of trustees (and dare I say practitioners – excluding subscribers to this forum obviously) who are oblivious of their obligations, and the lack of resource at HMRC to even deal with their day job of collecting tax, processing tax returns etc., let alone policing this monster.

This is a question I have considered and having found no guidance otherwise I have taken the view that if the trust was in existence on 6th October it should be registered and I have registered then on how they stood on that date.

Once registered and once the trustees has claimed the trust and authorised me to act I have then gone back into the register and amended it for the closure.

This I feel replicates what would have happened had the register been ready on the 6th October

The guidance “Manage your trust’s details” of 29 September says “You must use the online service to do one of the following: …close a trust”.

There is no authority in the SI for the trustees to close a trust or HMRC to accept or confirm that. But trustees are under an obligation to update the obligatory information and the clue to what HMRC mean by closing a trust is later explained:
“If you remove all trustees, settlors, named beneficiaries or all classes of beneficiaries, the trust will be treated as closed and you may not be able to access the service later. If someone is taking over these roles, you should wait until you have their details before removing all previous information so that you can still access the service.” ;and
“You must use the online service to update the trust register and ‘close’ the trust if you have registered it to comply with anti-money laundering regulations.
You’ll need to confirm that the details on the trust register are up to date and tell us the date the trust ended. Do not write to HMRC to tell us that the trust has come to an end.”

I have no idea what closing a trust means in trust law, in the absence of a contextual definition, and that does not matter, though it is hardly helpful for HMRC to use the term as shorthand for the above procedure. But they are not there to be helpful.

There are 2 oblique references to closing in the SI:

a) Reg 44 (9) requires paid professional trustees to retain prescribed records for 5 years “after the date on which the final distribution is made under the trust”;
b) Reg 45ZA (10J) requires HMRC themselves to keep information on the register for at least 5 and no more than 10 years “after the trust to which it relates has ceased to exist or has ceased to be” a type of registrable trust.

Although TSEM 1004 acknowledges that a trust is not a legal person but rather a relationship TRS seems to assume that like a company a trust comes into existence when formed (“set up”) and can cease to exist, on dissolution or striking off as it were, at some later finite point.

But this is what you must put up with if you get a Door Supervisor to instruct the Parliamentary draftsman using only “Janet and John go to Trusts” by E. Blyton

Jack Harper

Interesting reading. However as one who has not yet dived into the process of registering a trust, I would be very interested to hear what others consider to be the average time one might spend registering the average trust. I appreciate that many trusts differ but for example what time would one likely spend in registering a trust with two trustees, in which there is an interest in possession in a property with one life tenant on whose death three remaindermen would inherit absolutely. Contrast this with a discretionary trust where there are again two trustees and the usual class of discretionary beneficiaries.

Patrick Moroney

Hi Patrick,

I have been registering trusts for some time and the answer to your question, is that it depends on the information provided. We have come up with a questionnaire which we ask to be completed by the trustees with all the required information. Then the actual completion of the online form is relatively simple. It should only take around half hour. Collating the information comes down to the ‘piece of string’ analogy.

Lucy Orrow CTA TEP
Lambert Chapman LLP

Update. HMRC are of the opinion that a non-taxable trust wound up prior to 01/09/2022 still needs to be registered. See STEP update below:

The Money Laundering and Terrorist Financing (Amendment) (EU Exit) Regulations 2020 came into force on 6 October 2020, meaning that trusts without tax liabilities that fall within the scope of registration on or after this date must register on the Trust Registration Service (TRS) by 1 September 2022. HMRC has now stressed that trusts that were in existence on or after 6 October 2020 and have since ceased are still liable for registration on the TRS. Trustees of such trusts should register them on the TRS and then immediately close the trust record. HMRC has stated that it will take a proportionate approach should any such trust come to its attention after the deadline for registration of 1 September 2022

Duncan McGowan
Stevens & Bolton LLP

1 Like