HMRC trust registration service deadline: Are you the trustee of a trust - time is running out!

Mark Cornell, specialist trust solicitor, and paralegal, Emily Bloomfield, take a look at the recent changes affecting the trustees of a trust regarding the requirements to register a trust with HMRC.

HMRC became very concerned about the extent of assets being held by trusts that were not being assessed for tax properly. As a result, the government has introduced extensive legislation which means most trusts should have been registered with HMRC by 1st September 2022.

It is our experience that very many people who act in the role of trustee, are still unaware of this obligation. The professional adviser who helped you establish the trust may not have informed you of the new rules because so far as they are concerned, they have no ongoing relationship with you.

Do “bare trusts” need to be registered?

The requirement covers a large range of trusts including:

• "Bare trusts" where for example grandparents may have left money in trust for grandchildren;
• "Property life interest trusts" where a spouse may have passed away and half of the family home is held on trust for the surviving spouse;
• The administration of estates (Probates) where assets sold by the executors (trustees) within one tax year exceed £500,000 and;
• Nearly all "discretionary" trusts.

Any new trusts created have to be registered within 90 days of creation or two years from death if a Will trust.

Why register a trust as a trustee

HMRC appear to have acknowledged that the registration requirement is onerous and are not yet imposing penalties for late registration. However, the clock is ticking and it can only be a matter of time before HMRC do not accept ignorance of the rules as an excuse for late registration. HMRC state that the standard penalty will be £5,000.

Further, obligations have now been placed on all professionals (solicitors, accountants, surveyors, bankers) that they must not have dealings with a trust that has not been registered. If they are approached by trustees of an unregistered trust, then the trustees will be told of the need for registration, and if they still fail to do so, the professional must make a report to HMRC! This shows how seriously HMRC intend to approach the whole issue.

Update the trust register

Once a trust is registered, a trustee will be able to keep the details up to date through the HMRC portal and if required, be able to download a proof of registration document to show advisers and bankers.

Nationwide specialist trust registration solicitors

Holmes & Hills trust solicitors are able to offer a fixed price service for carrying out the registration of a trust on your behalf. If you are the trustee of a trust that has not yet been registered and you want to discuss whether it needs to be registered and the procedure for doing so, contact our specialist trust registration solicitor.

Nationwide specialist trust registration solicitors

Holmes & Hills trust solicitors are able to offer a fixed price service for carrying out the registration of a trust on your behalf. If you are the trustee of a trust that has not yet been registered and you want to discuss whether it needs to be registered and the procedure for doing so, contact our specialist trust registration solicitor.