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TRS: Don’t simply take it on trust

Posted: 05/07/2023

The Trust Registration Service (TRS) was first introduced nearly six years ago. The related regulations were substantially updated nearly three years ago, yet it hasn’t been possible to fully comprehend the practical impact of these regulations as they cover many different legal fields.

Our previous article in 2021 provided a brief outline of the TRS, along with some examples of the situations that are captured by the regulations.

Since the article’s publication, HMRC’s guidance, as well as HMRC’s online TRS service, has been updated and developed countless times.

The numerous updates would suggest that there have been adjustments to the legislation introduced which have significantly altered the regulations and the basis for guidance on them.

However, the only legislative change that has been introduced related to children’s bank accounts being excluded from the registration requirements, which is clearly a relief, but only represents a very minor change.

What is apparent is that the numerous, perhaps unforeseen, consequences of the legislation are starting to be recognised not only by professionals and trustees but also by HMRC.

The most notable changes to HMRC’s guidance include:

Authorised unit trusts

HMRC has indicated that AUTs will fall within an exemption which applies to trusts created for professional services where a trustee is: ‘acting by way of business as the trustee of an authorised unit trust scheme… with ‘trustee’ and ‘authorised unit trust scheme’ having the meaning given in s237 of the Financial Services and Markets Act 2000’.

HMRC has indicated that AUTs may still be required to register if a UK tax liability is incurred. However, this will only be required if the AUT needs to obtain a unique tax reference for self-assessment tax purposes.

Technically, the legislation completely excludes a trust from being required to register provided the trust satisfies the conditions of an excluded trust.

This is even if the trust subsequently satisfies the registration requirements for a different reason. For example, this scenario could arise when an AUT, which is excluded from registering by default, subsequently acquires an interest in UK land after 6 October 2020.

The acquisition of UK land after this date will create a registration requirement for a significant number of trusts. However, by virtue of an AUT being ‘a trust listed in Schedule 3A’, the registration requirements will not apply.

Unauthorised unit trusts

UUTs will not fall within any exemption and therefore will be required to register should any registration condition be satisfied.

This will result in any UK-based UUT being required to register by default, while an overseas UUT will only be required to register if a UK tax liability is incurred or when an interest in UK land is acquired after 6 October 2020.

This may be a concern to the trustees of any Jersey property unit trust or Guernsey property unit trust which has acquired land since 6 October 2020 but is yet to register.

Trustees should seek to correct the position and complete a registration as soon as possible. Trustees of non-exempt UUTs should note that UK corporation tax is not one of the taxes which will result in a trust becoming a ‘taxable relevant trust’ after it has been incurred.

Therefore, trustees who incur UK corporation tax may not have any obligation to register as a taxable trust, limiting the information they are required to provide on HMRC’s trust register.


HMRC has historically suggested that failing to comply with TRS could result in tax-geared penalties. This would have been of little concern for trustees of a non-tax-paying trust.

HMRC has now indicated that penalties up to £5,000 (per offence) can be issued where trustees have failed to register the trust, or where they have failed to keep previously registered information updated.

Should a failure arise, HMRC will evaluate the position on a case-by-case basis before determining whether to raise a penalty.

At present, HMRC has indicated that it would request the trustees to register the trust or update the existing record and a penalty will only arise should the request be ignored.

Practical steps

It is evident that when the anti-money laundering regulations, TRS system and guidance were first developed, the intention was to capture the information on the beneficial owners of a typical family trust arrangement or a bare trust arrangement that may have obscured the identity of beneficial owners.

As the interaction between the legislation and certain trust structures becomes clearer, HMRC’s TRS system and the accompanying guidance will continue to evolve over the years ahead.

It is therefore imperative that trustees of more complex trusts familiarise themselves with the legislation as HMRC guidance has not always accurately reflected the requirements.

Trustees of registrable unit trusts may need to consider their additional compliance obligations and what information they receive to ensure that they can sufficiently satisfy their TRS reporting obligations.

This article was originally published in Estates Gazette, on 20 June 2023.

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