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New guidance as trust registration deadline looms

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In recent weeks, there has been a flurry of new guidance added to HMRC’s Trust Registration Service manual. With the deadline for registration looming, Helen Thornley looks at the highlights from these latest changes.

19th Aug 2022
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By 1 September 2022, all express trusts in existence at 6 October 2020 should be registered on the Trust Register via the Trust Registration Service (TRS), unless they are specifically excluded. With the deadline looming, we look at the flurry of new guidance added to HMRC’s TRS manual. 

Penalties 

Guidance on penalties (TRSM80000 onwards) went live in early August and there is both good and bad news. The good news is that there is a very high bar for a penalty to be charged – HMRC will only penalise deliberate failures to register or keep information on the register up to date. According to the manual, examples of such behaviour include,“‘continued failure to register a trust following repeated warnings; or providing details that are deliberately inaccurate accompanied by continued failure to amend those details”. 

The bad news is that the penalty is substantial, amounting to £5,000 per offence. 

The manual explains that, as long as behaviour is not thought to be deliberate, HMRC will send a warning letter to trustees, giving them time to correct omissions or out-of-date information before penalties are in point. This is in line with previous HMRC statements about focusing penalties on those who are deliberately not engaging. 

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Replies (4)

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By Hugo Fair
19th Aug 2022 15:59

A useful collation at this very late stage, but if ...
'HMRC advises that trustees of non-taxable trusts with old or dormant UTRs can interpret the question as referring to current tax liabilities only, and so can answer “no” if the UTR is currently dormant and the trust is currently non-taxable'
... how is this 'advice' being communicated?

Is the wording in guidance & forms to be changed? And, if so, when?

Thanks (1)
Replying to Hugo Fair:
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By PhilipJG
25th Aug 2022 17:08

So if we know the answer is "yes" HMRC's advice is to answer "no". Can we use this logic elsewhere in dealings with HMRC?

Thanks (0)
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By Paul Crowley
19th Aug 2022 17:21

How so very HMRC
Lots of changes just before the deadline

Thanks (2)
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By More unearned luck
19th Aug 2022 19:34

On Penalties

"Reg 76.—(1) Paragraph (2) applies if [HMRC or the FCA] is satisfied that any person (“P”) has contravened a relevant requirement imposed on that person.

(2) [HMRC or the FCA] may do one or both of the following—

(a)impose a penalty of such amount as it considers appropriate on P;
(b)publish a statement censuring P."

The words "of such amount as it considers appropriate on P" suggests to me that HMRC (or the FCA) must have the object, all sublime, to make the punishment fit the crime.

To state in their manual that either there is no penalty or a penalty of £5K for late registration before regard to the facts of a case other than the (alleged) deliberate nature of the lateness seems unlawful. Nought to £5K seems too fantastic a rate of acceleration, especially when compared to the penalties for tardiness in filing SA returns. The £5K applies regardless of the size of the trust fund or the risk that the delay might have hindered the bringing of money launderers to book, so some Ps might have got off lightly with a £5K fine. But IANAL.

Thanks (0)