Geoff Parker indicates clearly that the criticisms made by me and others are not just academic indulgence.
As to potentially disregarding the law, it would be well to bear in mind the penalties. Regulation 76 allows HMRC to “impose a penalty of such amount as it considers appropriate”. There is an appeal under Regulation 99 but apparently only the decision, not the amount, leaving that to judicial review. An inexpensive and straightforward route (hollow laughter off).
HMRC in their online guidance for trustees has consistently said only “You may have to pay a penalty if you do not register the trust before the registration deadline”. (It is not clear whether their manual guidance at MLR1PP15000 is in point).
The Government said a little in the Condoc of 21 February 2020:". As 5MLD extends registration to non-taxpaying trusts, the government proposes to introduce a new penalty regime for TRS. 3.28 The proposed penalty regime is: • For the offence of failure to register there is no financial penalty, but a notification (nudge letter) would be sent to the trustee setting out their responsibilities • For the first offence of the failure to update details within the time limit there would be no financial penalty, but a notification would be sent to the trustee reminding them of their obligations and the time limit for updating the register • For a second and each subsequent offence of a failure to update details within the time limit, there would be a proposed set penalty of £100 per offence 3.29 In addition, it is proposed that: 12 • Any trustee found to have failed to register or failed to register on time deliberately, rather than as a result of a genuine mistake through lack of awareness, may be subject to a financial penalty in the first instance rather than a notification • Any trustee found to have deliberately failed to update details on the register or failed to update their details on time may be subject to a financial penalty rather than a notification • There will be an appeals process against any penalty issued, which trustees will be able to follow if they consider they have a reasonable excuse for not complying with the requirements to register on or update the trust register 3.30 This penalty regime relates to the registration and updating of details on TRS"
In the Summary of Responses of 15 July 2020: “2.33 The government recognises the need for effective and proportionate penalties for failures to register and keep information up to date on TRS, whilst also understanding that any penalty regime needs to reflect the extensive use of trusts throughout the UK and the fact that initially many lay trustees may not be aware of their obligations regarding TRS. The government is considering how best to raise awareness of TRS and of the obligations on trustees to register and keep information up to date. 2.34 The government intends to proceed with the proposed penalty regime as outlined in the consultation document”.
When a new tax looms HMRC usually start out by drafting assiduously all the more exciting (to them) enforcement provisions, including penalties and search and seizure, while apparently much paying less attention to the substantive rules (like those in the TRS for non-taxable trusts). Here they seem to think that they can bring in a registration regime without announcing their approach to penalties, despite the width of Regulation 76. Hubris. If anyone knows of a further development since July 2020 can they please tell us?
Jack Harper