With the 1 September deadline for registration of trusts in existence at 6 October 2020 rapidly approaching, HMRC have made a number of updates to the Trust Registration Service Manual.
These changes include:
- Details of penalties for failure to register – TRSM80000 onwards
- Details of how to make a trust data request – TRSM60000 onwards
- Additional Scottish examples at TRSM10030 (addition of content for Scottish liferent trusts) and TRSM23110 (addition of example for Scottish property purchase).
HMRC have confirmed their previous commentary on the Agent Forum that penalties will only be charged for a first offence where the failure is due to deliberate behaviour by the trustees. Where the failure is non-deliberate, trustees will be given the opportunity to register before penalties are charged. Agents and trustees should be aware however that penalites can be substantial. HMRC say that "Where failures to register are due to deliberate behaviour on the part of the trustees, a £5000 penalty may be charged per offence."
Non-taxable trusts with a UTR
HMRC have also updated their advice for trustees of non-taxable trust which have, for historical reasons, got a UTR. Members reported to us that such trusts could not register as a non-taxable trust due to having to answer 'yes' to the question about having a UTR. This meant they needed to register as a taxable trust, resulting in additional work and unnecessary disclosures.
We have for some time been pursuing the matter with HMRC in meetings and on the Agent Forum (thread TRS-16453) and are pleased to report that HMRC has now responded. On 29 July, HMRC confirmed that they are "advising trustees of non-taxable trusts with old/dormant UTRs to interpret the question within TRS asking whether their trust has a UTR as referring to current tax liabilities only, and answer ‘no’ if the UTR is currently dormant and the trust is currently non-taxable." HMRC have placed an update to this effect on the Agent Forum thread above, and this interpretation is now confirmed in the TRS manual at TRSM32020.
Use of Government Gateway Credentials
Before an agent is able to update a trust’s entry on the register, it is necessary to complete a ‘digital handshake’. This requires the trustees to set up a Government Gateway, pass ID verification checks and answer some questions about the trust based on the latest data supplied to the TRS about the trust.
We have received reports that some advisors are asking the client to give them the authority to open a Government Gateway account on their behalf to assist with either initial registration or the digital handshake, before passing the credentials back to the client.
We would like to remind members of the guidance provided in PCRT help sheet A: Submission of tax information and ‘tax filings’:
“Except in exceptional circumstances, a member will explicitly file in their capacity as agent. A member is advised to use the facilities provided for agents and to avoid knowing or using the client’s personal access credentials.”
Where digitally excluded clients are unable to complete the digital handshake, it should be possible to get authority by ringing HMRC for support.
We would like to reassure members that we have fed back their concerns about how difficult setting up a Government Gateways and completing the digital handshake can be for some clients.
We are still awaiting further details from HMRC on a number of aspects of the TRS. These include:
- Various queries connected to the two-year exemption window for estates.
- When or if trusts arising in the context of partnership land and assets need to be registered.
- Whether premium bonds held on behalf of minors are in scope or if, like Junior ISAs, these can be excluded.
- Whether trusts in existence for a very short period of time need to be registered.