HMRC have updated their Trust Registration Service (“TRS”) manual to state that unauthorised unit trusts (such as JUTs and GUTs) will need to consider whether they are required to register trust details on the TRS. Previous guidance stated that “unit trusts both authorised and unauthorised are not required to register”.
We understand that the reason for this change is that, previously, HMRC had considered unit trusts not to be “express trusts”. If trustees have no UK tax liability, they will only be required to register trust details on the TRS if the trust is “express”. Having considered the position further internally, HMRC now consider unit trusts to be express trusts.
Authorised unit trusts
Authorised unit trusts remain outside the scope of the registration requirement for non-taxable trusts, due to a specific exemption contained in the Money Laundering Regulations – but must register if the trustees have a UK tax liability.
Unauthorised unit trusts
The updated guidance states that “unauthorised unit trusts should register if they meet the general registration requirements” – meaning that unauthorised unit trusts will need to consider the rules more closely. By way of brief overview, a unit trust with only non-UK resident trustees (for example most JUTs and GUTs) will need to consider the registration obligation if:
- the trustees have a UK tax liability (which includes income tax, capital gains tax, SDLT and SDRT, but not stamp duty or VAT); and/or
- the trustees have acquired UK land on or since 6 October 2020.
Deadlines
The deadline for registering a non-taxable trust (i) with no UK trustees and (ii) which acquired UK land on or since 6 October 2020 (but before 4 June 2022) was 1 September 2022. If the trust became registerable (i.e. because it had acquired UK land) on or after 4 June 2022, a rolling 90 day deadline for registration applies.
Consequences
For those trustees who have not registered a trust within the deadline, HMRC’s guidance states that there will be no penalty for a first offence of failure to register or late registration unless it can be shown that the failure is due to the deliberate behaviour of the trustees. We would expect that failure to register an offshore unit trust due to reliance on the previous guidance is not treated as ‘deliberate’, provided trustees now act on the new guidance. Should a failure be considered ‘deliberate’, a penalty of £5,000 may apply per offence.
HMRC’s updated guidance can be found here, and our previous Law-Now containing more details of the expanded scope of the TRS can be found here.
Please contact your usual CMS contact should you wish to consider the registration obligation more closely.
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