Hello
I am just seeking clarification on what people think the correct start date is for Co-Ownership Property Trusts when registering on TRS.
We have been having quite the discussion within our office regarding this.
I personally think that the start date is the date of severance as that is when the trust became potentially registerable
Others think it is the purchase date as this is when a trust was initially formed through the joint tenancy.
Interested to hear others thoughts…
Can you set out the facts and chronology of the case?
Jack Harper
Hi Jack
Yes so for example …
Mr and Mrs Jones purchased their property on 2nd July 1996 as Joint Tenants
On 5th April 2023 they severe the tenancy.
Mrs Jones dies in January 2026 leaving her share of the property on life interest for Mr Jones
I know that when registering the Will Trust on the TRS, the Trust start date is date of death
But when registering the Co-Ownership Property Trust would the start date be initial purchase date or date of severance?
I look forward to your response
This is view I take
I would use date of death for registration for co ownership , if registration required , which it may not be
upon death by operation of law ( not express trust) both legal estate and beneficial interest held by survivor, but in respect of beneficial interest as trustee
I would only register co ownership if property not transferred into names of survivor (they already hold their share) life tenant and remainder men
Eg if transfer into husband name and children and they are the only ones who could benefit under will, then no need to register co ownership
Still need to register will trust
Not sure if this is correct view, but it’s what I do
Apposing views would be welcome
I belie the date the trust started is the date when the property was first purchased as that gave rise to the co-ownership.
Under TRS this would be excluded as trustees = beneficiaries and I don’t see the severance changing that.
On death of one of the co-owners the exclusion is lost and if prior to 30 June it became registerable but with the start date as the date of purchase. As I recall the system asks for the start date not the date it becomes registerable.
Following the changes brought in if death is after 30 June you now get a two year window before registration is needed
Still missing is confirmation that the legal title was registered in the names of both equitable co-owners, which is fundamental to the excluded status of a co-ownership trust.
Assuming that was so and continued despite severance, the trust only became registrable on the death of a tenant in common.
The start date is the date of acquisition of the equitable interest. Not later than completion of the purchase contract.
There is of course the theology of the trust arising on the formation of a binding contract of sale: Megarry & Wade 9th Ed 14-051 onwards.
Is it the same trust as the one ultimately requiring registration? It is not registrable pending completion, provided it is a non-taxable trust, as it arises by operation of law. It has the vendor as trustee. It is also a very funny kind of trust as M&W 14-052 explains. There is a strong argument that it is not identical to the co-ownership trust that arises on completion. The interval may well be short but can of course be very long indeed, more likely in a commercial context. This is likely to be lost on HMRC: jurisprudence is to the money-laundering regulations as strawberries are to donkeys.
TRSM32020 on start date is as blandly facile as much of the manual’s other contents.
I am curious about the experience of others in registering trusts whose start date precedes the operative date of its requiring to be registered by a considerable distance. Does it raise any enquiry? If the reason is not volunteered or solicited by the registration process how does HMRC ascertain that it is not a case of late registration?
Jack Harper
Hi Jack
To confirm, the property was registered in both owners names as Tenants in Common.
50% remains with the survivor, the other 50% is held on Trust.
Beneficial and legal owners are different hence the need for registration.
We always put the original start date of the trust, which I am sure HMRC confirmed to me that is what they expect. The trust was exempt beforehand and the TRS should give details of the trust on its legal basis.
So far I have had no enquiries from HMRC on putting the earlier date. However if they did ask you can demonstrate it was exempt so there is no late registration.
The requirement to register is for “express trusts”. When dealing with an express trust of land, the start date of the trust is the date of the execution of the document which created the express trust, which in this case is the the conveyance or transfer which the two owners signed when the property was transferred into their joint names. We confirmed this with HMRC when we first had to start registering non-taxable trusts.
A severance just changes the basis of the underlying ownership- it does not “create” the trust of land. The subsequent death is merely a trigger for registration, it is not the start date of the express trust.