Trust Registration Service New Changes

Hi Patrick

I raised the example of John in February in another posting.

Since then I raised it on the Agent Forum with HMRC. The initial reply I had suggested that if the will is silent on creation of a trust then there is no express trust, it is an estate in administration. It does not need to register as a trust on TRS.

I then queried whether the example of John was correct as the inference must be that of the administration runs over two years it is registerable. HMRCD replied saying that the example was correct as it does not say that the estate is a trust, it says the terms of the will specifically create an express trust. They also said that TRSM23020 would be update to make it clearer on the next review.

In the meantime I have also attended a course on which it was said that estates where the administration runs on more than two years are registerable even where the will does not include an actual trust

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If the legislation is there and requires a trust to comply with FATCA reporting requirements, and further legislation is there and requires a trust to comply with TRS reporting requirements, then yes, Peter, it does.

In your post there’s altogether too much “…only intended to…” and “…underlying principle…” and the like. We can’t go back to historical concepts to overturn Parliament’s clear intentions. Write to your MP.

You are clearly right, Julian. The legislation is there. It creates the problem, evidently not the practical solution.
Until an Act of Parliament converts a trust of land into a movable the trust of land remains an immovable and not a historical concept. Note ToLATA which recently removed the doctrine of conversion.

Based on Sch 3A MLR 2017 and HMRC’s TRS manual it seems to me that:

1. Has a trust been created by will?
If, no, then no registration requirements.
If, yes, then still no registration is required for the immediately (ie from death) ensuing two years.

2. Is the trust is still in existence at two years from the date of death?
If, yes, then registration is required.
If, no, then no registration is required (even if post the two years some aspect of the estate administration continues).

Malcolm Finney

One moment, Malcolm, the fourth of your points indicates that if a trust is not in existence two years after death no registration is required. But how can a trust have gone out of existence if there are some aspects of its administration still to be dealt with? We cannot distinguish estate administration from trust administration, can we?

Julian Cohen

Simons Rodkin

Julian, rightly or wrongly, I was interpreting HMRC’s comments and
Sch 3A MLR 2017 as meaning that if a will trust is for example wound up within two years of death registration would not be required.

In this regard I had answered (correctly or not) above re Patrick’s query
“The trust was created by will and is exempt from registration for a two year period; the trust ceased within this two year period on the surrendering of the life interest and the remainder beneficiaries acquired absolute title”.

Malcolm Finney

I have just spoken to HMRC about whether or not the bare trust has to register. They were not very helpful! Their first response was to tell me that it was not for them to advise me whether or not the bare trust ought to be registered, but when pressed said that the original trust should be closed down and a new registration created for the bare trust as non tax paying. Presumably that would need to be closed when the trustees finally rid themselves of the assets. What they are essentially saying is that by far the majority of trusts will have to register and deregister twice because pretty much every trustee holds assets on a bare trust when an express trust comes to a legal end. I can’t believe that they are serious about that (and I’m not convinced that the person I spoke to fully understood the issue)!

Isn’t it great that HMRC are asking trustees to ask a professional…?

I had gone through the same thought process, and understood one closes and another has to be registered, which is just ridiculous.
However exclusion 14 may be in point, this is the “commercial exclusion”, or exclusion 15, which I read as being where property is held on trust while the legal title ‘catches’ up with beneficial interest.
I have taken the view that if a trust appoints assets out but there is a short time where the trustees still hold on bare trust, because legal title takes say 6 months to sort, it is excluded.
However if the deed appoints out the property from the trust and mentions it is held on bare trust I am not so sure, as a bare trust is specifically mentioned. I do feel the exclusions can still apply.

Overall it is a mess. I attended a CIOT webinar on the TRS and they said they are talking to HMRC about these problems areas. So where is the guidance and answers? It is getting late in the day now.
Far too many “trusts” seem to be caught!