New HMRC guidance on the UK Trust Register

28 July 2020

Following our previous update regarding the requirement for certain Trustees to provide details of the Trust to the UK on the UK Trust Register, HMRC has clarified their interpretation of a ‘business relationship’ under the EU’s 5th Anti Money Laundering Directive (“5MLD”).

As a reminder, in general a registration is required if the Trustee has a UK tax liability (as defined).  Under 5MLD this is extended to non-EU resident express Trusts that have a business relationship with an obliged entity in the UK.  HMRC’s view remains that this includes a business relationship with UK service providers such as accountants, banks and lawyers.

In their new guidance, HMRC has indicated that a business relationship in this context does not include one that is not expected to endure for 12 months or more at the time the relationship is established. 

Further, HMRC has confirmed that they will take a measured approach and will only require non-UK trusts to register on entering a UK business relationship if the Trust has at least one UK resident Trustee. 

This is a significant development as it will mean that the majority of Swiss Trustees will not be required to register if their only link to the UK is through a business relationship with a UK based adviser. 

The new regulations will also mean that access to information under the Trust Registration Service is extended to anyone with a 'legitimate interest' (this is restricted to government authorities at present).  The government have confirmed that guidance will be provided as to how requests will be reviewed and access will only be given where there is evidence of counter money laundering or terrorist financing activity. The government have also confirmed that necessary safeguards will be in place to reduce the risk of information being released where it could lead to disproportionate harm.

Finally, under 5MLD Trusts that have already registered on the UK Trust Register will have to provide additional information about their beneficial owners and those with UK tax liabilities will find that the information required to register is more onerous (for example details will need to be given about trust assets).

If you have any questions about the UK Trust Register or would like to know how the latest guidance impacts your clients, please let us know.