It’s almost 1 February. Once there, you’ll be able to sit back, knowing you did all you could. The office will be half empty with staff using time off in lieu, and finally you can turn your attention to all the planning work that has been put to one side.
At least, that’s what you might have done in previous years. This year, many agents will be turning their attention to the next compliance requirement – the Trusts Registration Service (TRS).
What is the TRS?
Following the introduction of new Anti-Money Laundering regulations in July 2017, trusts liable to pay certain UK taxes must be registered on HMRC’s new trust register.
Trustees must provide details of the original trust assets and the trust’s beneficial owners. These are broadly the settlors, trustees and beneficiaries of the trust, together with anyone else with control over the trust assets. Registration is carried out through the TRS, and the last few months have proved challenging for all involved.
Deadlines and penalties
Under the regulations, the registration deadline for a trust with a tax liability in 2016-17 is 31 January 2018. Following representations from professional bodies, HMRC acknowledged the pressure this date would put on agents and announced in December that no penalties will be charged where registrations are completed no later than 5 March 2018.
However, trusts registering for self-assessment for the first time in 2016-17 will have needed to register earlier in order to meet their self-assessment obligations. As the TRS is now the only mechanism for a trust to acquire a UTR, trusts new to self-assessment will normally be expected to register for self-assessment by 5 October following the end of the tax year. For 2016-17 only, since agent access to the service was delayed, this was extended to 5 January 2018.
The regulations provide for both civil and criminal sanctions for late registration, or failure to register, with the TRS. As yet, HMRC have not indicated how will be applied.
How is the TRS accessed by agents?
An agent who has been appointed to register a trust needs to obtain a new Agent Services account in order to access the TRS. Agent Services accounts are being developed as part of HMRC’s Making Tax Digital programme. Each agency will have a single account, linked to the agency’s UTR.
If your agency does not already have its unique Agent Services account, it can be created by following the link under “Register your trust” here and logging in with any of the agency’s existing Government Gateway credentials. The system should recognise that a new account is required.
Many agents have raised concerns about internal confidentiality. If the access details to a firm’s Agent Services account are shared within a firm, staff can see any TRS registrations in progress. Until further functionality is added to Agent Services accounts, HMRC is recommending that firms create associate accounts for their staff by logging into the Government Gateway. For particularly sensitive trusts, confidentiality can be maintained by completing and submitting the registration in one session.
Currently the TRS form requires all data fields to be completed before it can be submitted. HMRC expects trustees to make reasonable endeavours to obtain the necessary information on their beneficial owners. But there will be cases where trustees simply cannot obtain the necessary information, for example if a beneficiary is missing or uncontactable. In these cases, HMRC has suggested trustees use the following dummy data:
- Date of birth – 1 January 1900 (this is the earliest date the system can accept)
- Address – HMRC are recommending either the trustee or agent’s address is used, replacing the postcode with NK1 1NK.
- NI number – AB123456A
- There is also a specific workaround for deceased settlors where the NI number is unknown.
HMRC requests that dummy data is not used for trustees or personal representatives.
We understand that HMRC is working on amending the TRS so that it will allow trustees to submit with blank spaces where they have tried, but failed, to obtain the necessary information.
During registration, trustees are asked if hold-over relief has been claimed. This information is not required as part of the regulations and the trustees may not always know the position. HMRC has advised that if trustees don’t know the answer they should answer “no” to this question.
Where to get help
There are a number of sources of help and advice about the TRS.
HMRC has produced guidance in the form of a FAQ document. This has been provided to professional bodies only and is not available on the GOV.UK site. The version from 22 November 2017 can be found here.
HMRC has also produced a number of Talking Points webinars on this topic. These need to be viewed with some caution as HMRC’s interpretation of some areas, particularly beneficiaries, has changed from the earlier versions. The webinar from 17 November is available here.
Agents can also contact the HMRC, Trusts and Estates line for advice on 0300 123 1072.
The ATT have prepared a briefing note which covers a number of aspects of the TRS. The latest version can be found in their technical pages here.
Helen Thornley is a technical officer with the Association of Taxation Technicians.