HMRC Publishes Technical Consultation on Fifth Money Laundering Directive and Trust Registration Service

HMRC and HM Treasury published a technical consultation document on 24 January 2020 inviting responses to a number of questions raised in connection with the proposed additional legislation to the Fifth Money Laundering directive relating specifically to the new Trust Registration Service (TRS).

The new legislation requires the majority of express trusts to register using the TRS. Following the previous 5MLD consultation, to which TACT responded, the key points of this consultation and the proposed legislation are:

Trusts Required to Register

• Certain trusts are considered to be out of scope and therefore not required to register, including:
  • Statutory trusts
  • Joint ownership trusts for the purpose of jointly owning a home
  • Where two or more people co-own an asset legally and beneficially for themselves with concurrent and not successive interests
  • Maintenance fund trusts for historic buildings
  • Approved share option and profit-sharing schemes
  • Vulnerable beneficiary trusts
  • Personal injury trusts
  • Trusts to hold life insurance policies, income protection policies or policies for retirement death benefits
  • Registered pension schemes (where they are already registered with HMRC, FCA and TPR)
  • Charitable trusts
• Further representations will be considered by the government in relation to Bare Trusts

Registration Deadlines

• Trusts in existence at 10 March 2020 must register using TRS by 10 March 2022
• Trusts set up after 10 March 2020 must register within 30 days or 10 March 2022 whichever is later
• Trusts set up on or after 10 March 2022 must register within 30 days

Penalties for Failing to File

• There is no penalty for failing to file but a notification (nudge letter) would be sent to the trustee setting out their responsibilities
• For the first offence of failure to file or update within the time limit there would be no financial penalty but a notification would be sent to the trustee
• For the second and subsequent offence of failure to file or update within the time limit there would be a proposed set penalty of £100 per offence
• Any trustee who is found to have failed to file or update deliberately (i.e. where they were aware of the requirement) may be subject to the fixed set penalty in the first instance
• There will be an appeals process

TACT will be issuing a response to the consultation following a review of Member comments and representations.