Hiya,
I have a client who died in July last year, but the trust of land that became registrable following his death was not registered.
Following the TRS updates bringing the trust of land registration in line with the two year grace period for estate administration, does this trust need registering? It was past the 90 day deadline but had still not been registered by the time the new rules came into effect.
Thanks,
Jessica
Not sure what “updates” you are referring to.
What are the facts concerning how the trust “became registrable”?
TRSM23020 provides a detailed exposition of HMRC’s views about trusts created on death, which may be your situation.
The Manual is not law but HMRC act as if it is and indeed may well have convinced themselves of that, given their pervasive institutional arrogance. As it is hopelessly cost-ineffective to challenge their views the Manual is de facto legislation by proclamation.
Jack Harper
Jack - the 2017 Regs, including the exclusions, were amended with effect from 30 June '26. New Para 9A extends the “co-ownership” exclusion for up to 2 years where one co-owner dies (so the original/main co-ownership exclusion ceases to apply).
Jessica - I suspect the true answer is that the co-wonership trust should have been registered but it is not now registrable. In the circumstances I would likely take one part “commercial view”, one part “more trouble than it is worth” and a dash of “HMRC don’t care”. Provided the client agrees, I wouldn’t bother registering unless/until you reach the 2 year anniversary. Others may disagree..!
Hi Andrew,
Thanks for your help! The co-owner of the property received my standard letter recommending TRS registration and contacted me saying they didn’t want to do it. Pre 30th June I’d have just said “yep, over 90 days, legal requirement” but I’m not sure if there is technically a legal requirement now.
I may just say to them that HMRC guidance is unclear and they act at their own risk.
Thanks
Jessica
Hi Jack,
The TRS regulations were updated on 30th June to extend co-ownership exemptions amongst other things. I don’t know whether they apply retroactively, i.e. whether the old or new rules apply to a trust that wasn’t registered but should have been.
Thanks,
Jessica
Thank you Andrew. I missed that change.
I did first check the Manual updates section online. It still says, I paraphrase, “ Can’t tell you now”. Given that HMRC will have known months in advance that this change to the SI was coming their failure to amend their manual for a 30 June change of significant general interest by 6 August is symptomatic of the contempt in which they hold their “customers”.
As regards my own affairs I operate my experience, innate devious strategic cunning, detestation of the establishment, and the fastidious conscience of a well-trained hippopotamus.
When acting for a client I tried exhaustively to assess their specific appetite for risk wherever the tax law was not definitive.
The TRS system contains many examples of legal stupidities founded on jejeune and erroneous jurisprudence. It is overbearing administration dressed up as law with draconian penalties tempered by a self-denying ordinance of extra-judicial non-justiciable (save at great cost by JR ) restraint.
In any system of coercive state repression you have a stark choice: comply or take the consequences.
For the lay client there is the issue of cost but my advice to such a client is that it is better to register any express non-taxable trusts that may have been created even by your domestic pets as the theoretical penalties (TRSM80020) are wholly disproportionate to the mischief and the likely quixotic mercy of Cocklecarrot J.—as he then was.
I am bombarded literally every 5 minutes by emails concerning the structure of HMRC, how much its officers have spent, Data Element this and that, and how to tell whether a communication from them by various means is genuine. But I must don sackcloth and ashes for missing the mail about something that actually matters. Unless, of course, that was their subtle plan!
Jack Harper
Jessica, that’s what I would do. But make sure you have unequivocal evidence in writing that they have knowingly assented to accept the risk and consequences of future action by HMRC.
Jack Harper
Jumping in a little late, sorry.
Is this a consequence of the notion of joint ownership of land being obtusely treated as a trust under ToLATA 1996, for some reasons known only to conveyancers, along with the tenancy in common - rather than as a survivorship or better a ius accrescendi? A Form A Notice on Land is generally treated as indicative of a tenancy in common although at Law it simply indicates to an enquirer that there is a possibility that they have to deal with several individuals at the same time, rather than with one. That is technically a question of remedies not of a constructed ‘trust’.
Here a distinction may need to be drawn between the legal and the equitable procedural remedies instituted by s.1 LPA 1925 in relation to estates and interests in land that are not legal estates as per s.1(1) and s.1(2). That distinction as to remedies was the backbone and sine qua non of the 1925 reforms. The fact that ToLATA 1996 is interpreted as instituting a ‘trust’ of land for convenience may not therefore be final.
Is joint ownership of or ownership in common actually a ‘trust’ as such in its own right at law outside statute? If the ownership in common is extinguished on death, is it not still by a legal survivorship, as opposed to an equitable transfer? It is admittedly treated as a transfer of value for IHT purposes, but that in itself is not final
If it is simply a question of determining who has the right to deal with the property as joint owner, or under a Form A notice as tenants in common, then is it any more than an allocation of jurisdiction as to equitable remedial relief over wrongful dealing, wrongful payment, inability to give a full receipt etc. etc. as opposed to common law remedies?
If so, it is hardly surprising that HMRC are a little lost given the pressure from their European colleagues at Brussels and le Château de la Muette and the fact that they have to leave cocktails early to catch the last Eurostar.
Particularly as the FATCA (i.e. US) side of ‘Trust registration’ was never intended to affect immovable property (their FIRPTA addresses that), just movables. It is the EU aspects of transparency that appear to have rendered this a bear trap.
I share Jack’s inherent scepticism and I would add my own considerable doubt that political wall-papering over joint ownership and ownership in common in the TRS Regulations by a mere reference to a ‘trust’ of limited remedial effect may not actually have been the right approach.
The initial preparatory documentation for the Hague Convention on Trusts makes it quite clear from the English side that the doctrine of conversion of land, since abolished by ToLATA was an issue. I could go into that in more detail, but not here. The Recognition of Trusts Act 1987 (article 2) passed as a consequence of the UK’s adhesion does not appear to support explicitly legislation going in the direction of the indigenous Trust Register’s assumptions as to reducing joint or several ownership of English land to a trust in their own respective rights.
An equitable remedy does not necessarily a trust make, without more. Hence the Settled Land Act and the 1925 trusts legislation and the equitable ‘constructive trust’ remedies.
I am more than willing to be queried on this for research and debate - not sure that I am as able as my colleagues from what used to be known as the Chancery Bar to respond definitively one way or any other.
Ius accrescendi was one of the most simple and effective legal concepts, I would certainly appreciate comments on whether others consider that a tenancy in common is now considered to fall outside it. I do not see any express statutory authority to support such a fundamental change in ToLATA, but that would be a question of interpretative practice
Peter’s contribution underscores the jurisprudential deficit inherent in these AML regulations. I think you can rely on HMRC having no comprehension of whether your trust is an equitable joint tenancy or an equitable tenancy in common—and note that Scots law takes no cognisance at all thereof. Seeking to get HMRC to differentiate these would be like feeding strawberries to a donkey and requesting it to rate them on Trustpilot.
My assumption was that the trust in question could be ultimately be traced back to a gift by a Will and the deceased died more than 2 years ago. And that the trust may have arisen either from the Will itself or pursuant to a transfer in course of the administration of the estate—but it must be express to be registrable. Property trusts are often implied: e.g. on a transfer to more than one person. HMLR may ask you what kind of joint interest it is (and they do get the difference) but that does not make the resultant mandatory trust per s.34(2) LPA 1925 express to my mind (but I am a fat ugly octogenarian so what do I know).
Infuriating purists comme moi will indeed argue that a statutory trust is implied not express but with ANL it is safer to assume the contrary and rely on a specific exclusion where possible. This too is a basic distinction unintelligible to the average HMRC donkey. There really is no mileage in pre-supposing subtle technical knowledge on their part and still less in engaging with them about it, certainly not on the clock for a client absent precise instructions.
The purpose of AML legislation is to fine and ideally imprison professionals for failing to act correctly as involuntary unpaid gatekeepers for the UK deep state (and the unelected, shadowy and foreign Fatuous Forty) so the default stance must be to register anything that remotely resembles a trust without regard to the niceties that would be critical to interpreting any other type of UK legislation.
Jack Harper
I am sure there must be many similar situations as the following: –
I have recently taken on the estates of husband and wife. Wife died in 2020 giving her husband a life interest in her share of their home and after his death divided amongst several nieces and nephews absolutely. Husband has now died leaving a mirror will so his estate now goes to the same nieces and nephews. Nothing was done in relation to the Trust created by the wife’s will so there was no TRS for co-ownership done nor was there anything done for registration of The will Trust.
AI with which I am still somewhat suspicious about says that the trustees should nevertheless register both and then cancel the registrations.This to me seems totally nonsensical since there is now no continuing Trust involved and unless it takes more than two years to administer the estate of the husband only then is registration for TRS needed. I’d be interested to know what others feel?
Patrick Moroney
This is one of the myriad defects in the TRS, not in this case a jurisprudential deficit but a simple grotesque failure to envisage commonplace issues relatively likely to occur in practice.
The counsel of perfection is to follow AI KC. Do nothing is the counsel of a well-trained hippopotamus like myself, crucially when acting re my own family’s affairs.
The potential problems for a professional adviser are threefold.
1 You must surely secure client buy-in by explaining the risk of civil penalties and the ambit of reasonable excuse thereby giving the client thus informed the opportunity to disregard your peerless advice that trustees are strictly under an obligation to register. Most awkwardly I suggest that you must inform them that under Reg 86 and Reg 75 and para 9 Sch 6 of SI 2017/692 this obligation is a “relevant requirement” contravention of which constitutes a criminal offence, apparently of strict liability. The theoretical punishment is no different to providing false or misleading information under Reg 88. I would furnish them with the text of TRSM80020 and emphasise that the Manual only mentions civil liability. If they then choose not to register I suggest that you would be in the clear.
2 Given 1 above I suggest that there would be no need to write the traditional letter to your insurers. You might want to assess the character of your clients as to whether they might be unscrupulous enough, however groundlessly, to accuse you of skulduggery if only to avoid paying your fees.
3 Given 1 above there is the risk if you continue to act you may have to consider the likely attitude of your supervisory/regulatory/professional body. Independently of that would you be prudent to continue advising a client that might be congenitally lax about their fiscal and regulatory hygiene? The kind of statutory nonsense you describe might in context occur to you as being de minimis non curat lex. It is but one of the many unwanted invidious antagonisms inserted into adviser-client relationships by an overbearing, tone-deaf, spiteful, desensitised, power-crazed Legislature.
NB A “relevant person” must comply with their own AML obligations (see the AMLG manual) and in a trust context the business relationships red tape where a non-UK trust is obliged to register under TRS.
Jack Harper
Thank you, Jack. As I near my “early” retirement next Spring after 61 years in the saddle, I will ensure that my clients (and me) abide by the law, not withstanding the stupidity of the exercise.
Patrick