What do I have to do?
The first step is to determine whether the trust for which you are a trustee needs to be registered under the provisions. If so, you can then decide whether to conduct the registration yourself, nominate a fellow trustee to do this, or appoint an agent to do it for you.
If you are unsure about any part of your obligations, it is recommended that you seek professional advice, even if you go on to carry out the registration yourself.
The registration process
Registering a trust through the online system involves gathering together relevant details to pass on to HMRC. This will include details about:
- The trust.
- The trust’s beneficiaries or classes of beneficiaries.
- The trust’s trustees and settlor (the person who set up the trust).
- The money and assets contained within the trust.
What can happen if I don’t register a trust?
If you are a trustee of a trust which must be registered, but you do not do so in the relevant timescale, you may be personally liable to pay a penalty. Each matter is assessed on a case by case basis and penalties are not automatically applied.
The possible penalties are:
- £100 for registrations up to 3 months past deadline
- £200 for registrations between 3-6 months past the deadline
- £300 or 5% of total tax liability in relevant year (whichever is the higher amount) for more than 6 months past the deadline.
Updating HMRC on changes to the Trust
Besides the requirement to register the trust initially, you also have to inform HMRC
of any changes to the trust. However, this is only the case where the eligibility conditions (described under ‘Which trusts have to be registered?’ above) are also met for the tax year. So, for example, if a registered trust does not incur a relevant tax liability in a certain tax year, you are not obliged to report any changes occurring in that tax year.
However, as soon as another tax liability is incurred which meets the conditions, you will be obliged to update HMRC with the new details of the trust.
Relevant changes include those to:
- The correspondence address of the trust
- The details of the trustees
- The details of the beneficiaries
However, there is no requirement to provide updates as to the trust’s assets. These are only detailed once – at the time when the trust is first registered.
The deadline to update HMRC of changes will be 31 January after the end of the tax year in which the change took place.