Trust Registration Service (TRS) and AML compliance
Our corporate and non-corporate guidance aims to help members navigate the trust registration requirements:
- our TRS legal sector (non-corporate) guidance will help those who do private client work
- our TRS legal sector (corporate) guidance will help members who advise on trusts that arise in a commercial context
Solicitors should be aware that due to the implementation of the Fifth Money Laundering Directive, many express trusts without UK tax liabilities will:
- fall within the scope of registration on HM Revenue and Customs' (HMRC) Trust Registration Service, and
- therefore need to be registered by 1 September 2022
The registration obligation will fall on the involved trustees.
This means the law firms and their principals and/or trust corporations which have historically acted as trustees will need to investigate their records.
As there is no backstop, this could involve looking back over many years to assess whether any non-UK tax paying trusts of which they remain trustees will become registrable in 2023.
This change will also impact their advisory obligations towards their clients who act as trustees.
Trustees of trusts that existed on or after 6 October 2020
HMRC has confirmed that trustees of trusts that were in existence on or after 6 October 2020 and have since ceased will also still need to:
- register these on the TRS, and
- immediately close the trust record
UK trusts not subject to UK tax
This extension of the TRS regime brings all UK trusts that are not subject to UK tax, unless specifically excluded, within the scope of registration and disclosure.
Non-UK express trusts
Non-UK express trusts that acquire UK real estate or which have at least one trustee resident in the UK and enter into a ‘business relationship’ within the UK will become registrable, again unless specifically excluded.
Trusts excluded from the registration requirement
The exclusions, now covered in HMRC guidance, are complex and themselves subject to limitations.
The consequence of implementation of the Fifth Money Laundering Directive is that many more trusts, including some will trusts in the probate context and co-ownership trusts and other trusts used or which arise in commercial contexts, will need to be registered with HMRC.
How our guidance can help
The guidance will help corporate lawyers understand when trusts will need to be registered with the authorities.
Solicitors who have historically acted as trustees or advised the creation of trusts will need to know what the changes mean for their practice, otherwise they risk failing to comply with their AML obligations.
Law firms may need to conduct a legacy review of many matters, including transactional matters, to assess where these newly registrable express trusts, in relation to which they or their clients may be acting as trustees, exist.