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HMRC Provides Trust Registration Update

Monday, January 8, 2018

The UK tax agency, HM Revenue and Customs (HMRC), has told the Association of Tax Technicians that those not yet able to use its new Trust Registration Service (TRS) will not yet be penalized, having offered extra time for affected persons to register.

New anti-money laundering regulations introduced in June 2017 require trusts liable to certain taxes to retain written records of the individuals involved in the creation and running of the trust, as well as those that can benefit. A large amount of personal detail for each of these parties must be reported to HMRC for inclusion on a new Trust Register via the TRS. The register will not be accessible to the public, but will be accessible to a number of law enforcement agencies and is part of a global drive to enhance transparency.

Trustees have until January 31, 2018, to register reportable trusts on the new Trust Register but agents, who look after the vast majority of trusts, have experienced difficulties with the new system, including technical difficulties in late December. The TRS became available to agents on October 17, 2017, but is only accessible to them once they have obtained a new Agent Services account. This is a new online service for professional tax agents which HMRC has been developing as part of the wider Making Tax Digital program.

The TRS is still at a pilot stage and, according to the Association of Tax Technicians (ATT), some professionals who have had limited contact with HMRC have struggled to gain access to the TRS to comply with the new obligations.

The ATT has newly hosted an update from HMRC on these issues on its website. HMRC told the association: "We understand that the paper data capture process for 'digitally excluded agents' (typically solicitors with only occasional interaction on paper with HMRC in the past) was to expire on January 5. Such firms will now have to await the 'solution in early January.'"

HMRC stated: "[...]The new Agent Services account is being delivered in an iterative way and whilst the majority of agencies have successfully registered, we recognize a small number of users who have no/insufficient HMRC digital footprint have not been able to access the TRS. We hope to have a solution in early January 2018. Information on how to be set up as an Agent can be found at GOV.UK."

"In the interim, the process that should be followed by these agents who currently have no access to the digital TRS is as follows:

For Existing Trusts

Agents of existing trusts (that do not require self assessment (SA) registration or are already SA registered) can register after the January 31, 2018, deadline but before March 5, 2018, and we will not impose a penalty. We advise that these agents should wait until they have digital access to the TRS in early January and then submit their registration by online.

For New Trusts

For agents of new trusts (that incurred income tax or capital gains tax liability for the first time in 2016-17) and have no/insufficient HMRC digital footprint, the Trusts and Estates helpline will issue a paper Data Capture Sheet. We will then manually process the paper returns upon receipt, both enabling TRS registration and allowing us to provide a Unique Taxpayer Reference (UTR) so that agents can proceed with submitting their client's SA tax return. We will take a reasoned and proportionate approach to penalties where the customer or agent have not been able to register on the TRS solely due to technical issues but have done so as soon as reasonably possible."

It further added: "If trustees, or an agent acting on behalf of trustees, file their SA return within three months of receiving a UTR then no penalties will be incurred. If the tax return is, however, filed later than three months after receipt of the UTR then a penalty will be applied. Nevertheless, the payment of any tax owed for 2016-17 will need to be submitted no later than January 31, 2018, or a penalty charge will be applied."

"We have already extended the registration deadline from October 5, 2017, to January 5, 2018. Given the vast majority of the agent community have had access to the TRS since October 2017 and taking into account the relatively small numbers of trusts requiring a UTR, we do not consider there to be sufficient grounds to merit a further extension to the deadline as to do so would put the collection of public funds at risk."

"We recognize and appreciate the frustration experienced by some within the trust and agent community and apologize for the delay in providing agents with access to the TRS and the other technical difficulties encountered," HMRC said.