Trust Register - definition of company residence for TRS purposes

When completing the Trust Register for a corporate trustee which is not a UK registered company, the question “Does XXX Limited have UK residency” has a note underneath stating that “The business has UK residency is it is registered with Companies House”.

HMRC’s TRS manual at TRSM32030 states the following:
Country of residence
This is where the business is registered or incorporated. A company is treated as having UK residency for TRS purposes if it registered with Companies House. For other businesses or organisations, select the country where the principal or main office is located.

A lot of offshore corporate trustees are now registered with Companies House, but solely for the purposes of the Register of Overseas Entities. It seems from the above that the question should be answered in the affirmative, but our trustee clients are understandably very reluctant to make a submission to HMRC stating that the trust company is UK resident.

Has anyone else come across this, any thoughts?
Many thanks in advance.

Not had to deal with it (fortunately) but I would not consider a company UK resident on the basis of a ROE entry when, by definition, only non-resident entities can be registered under the ROE.

This is just a case of the staff creating the registration portal making it up as they go along or (quite possibly) copying it from the manual which was written by people making it up as they went along. They are unlikely to have considered the ROE.

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Reg 42(3) MLR provides:
A trustee or settlor is resident in the UK—

  1. (a) in the case of a body corporate, if it is a UK body corporate;

Reg 42(2)(a) MLR provides:
(2) For the purposes of this Part— (a) a “UK body corporate” is
[i] a body corporate which is incorporated under the law of the UK or any part of the UK,

Malcolm Finney

The starting point is Reg 42 (3) which defines residence of a trustee or settlor. In the case of a body corporate it is resident in the UK if it is a UK body corporate within Reg 42 (2)(a), i.e. incorporated in the UK or a Scottish partnership.

A taxable relevant trust, whether a body corporate or not, must disclose “the country where it is considered to be resident for tax purposes”: Reg 45(5). This logically includes but is not restricted to UK tax. A relevant trust in Reg 42 is a UK or non-UK trust by reference to where its individual trustees are resident for specified UK tax purposes but a sole corporate trustee is only resident if within Reg 42(2)(a). Trustees have to form a view of their residence status under Reg 42 to determine whether the trust is a relevant trust at all.

A non-taxable trust must decide whether it is Type A B or C by reference to its residence per Reg 42: Reg 45ZA (2). Type B and C are trusts which are not just non-UK but have at least one UK resident trustee in Type B or no UK resident trustees in Type C. This regulation does not specifically ask for disclosure of the residence of the trust but this is implicit in the UK/non-UK distinction which goes back to Reg 42. Sub-para 3(b) requires disclosure of beneficial owners but only an individual’s country of residence not that of a legal entity and in sub-para (4) this is not required as regards a third country entity in which a Type A or B trust has a controlling interest.

So the tax residence of a body corporate is only a required disclosure, by necessary implication, to determine whether it is a taxable relevant trust by its being a UK trust and if non-taxable whether, again by implication, it is Type A or B trust or a Type C trust. A corporate beneficial owner must have certain details disclosed in Reg 45 (7) and Reg 45ZA(3)(c) but these do not include its tax residence.

Regs 43 and 44 (obligations of UK corporates and trustees of any relevant trust) require no disclosure of any person’s tax residence save by implication.

A beneficial owner under Reg 6(1) includes a settlor, who can be a corporate, UK resident or not, but only an individual who controls a trust. Even so a corporate beneficial owner’s tax residence is not expressly disclosable although it may be inferred from the other details which are disclosable and these include a UTR if it has one and is a taxable trust, which may well involve HMRC knowing its tax residence. A non-taxable trust can itself have a UTR but not be within Reg 45(14) in any given year and a corporate beneficial owner’s UTR may have been previously disclosed when it was taxable, as recognised by Reg45ZA (3). HMRC at least believe in the possibility of migration from one category to the other but this is not expressly stated in the Regs.

Jack Harper

[quote=“S_Helen, post:1, topic:18978”]
The business has UK residency is it is registered with Companies House”.
[/quote]. This is clearly a thoughtless comment, made before the addition of the ‘Register of Overseas Entities’, and is clearly contradicted by the legislation. HMRC’s Guidance is out of date.