Changes to HMRC’s Trust Registration Service Penalties

With the deadline for registering non-taxable trusts by 1 September 2022 becoming ever closer, HM Revenue & Customs (HMRC) have released updated guidance on penalties for late registration.


The introduction of the EU’s Fifth Money Laundering Directive (5MLD) on 10 January 2020 imposed further legal and administrative obligations on Trustees in England and Wales. Trustees of express trusts, whether taxable or not, must now register the trust on the Trust Registration Service (TRS) subject to a few exemptions.

One of the categories of trusts which have been impacted are Will Trusts, which were previously exempt from registration under the Fourth Money Laundering Directive (4MLD) if they were not income-producing. Following the introduction of 5MLD, Will Trusts that are still in existence following two years from the death of the settlor now need to be registered.

HMRC published very little by way of guidance on the implications or penalties for late registration with the TRS, which left a lot to speculation. However, this week, HMRC have provided guidance on the approach they will be taking on late registration with the TRS.

HMRC have stated that “in recognition of the fact that the registration requirement is a new and unfamiliar obligation for trustees, there will be no penalty for a first offence of failure to register or late registration of a trust unless that failure is due to deliberate behaviour on the part of the trustees”. Where it can be shown that failure to register the trust is due to deliberate behaviour by the trustees, a £5,000 penalty may be charged per offence.

Trustees will also need to ensure that the trust is kept up-to-date on the TRS, and must report any changes to the trust, such as a change of trustee or beneficiary, within 90 days. Where a trust is taxable, the trustees will also need to submit an annual declaration on the TRS, to confirm that the details of the trust are up-to-date, whether or not any changes have been made to the trust. HMRC’s guidance provides that where the trust is not liable to tax, an annual declaration will not be needed.

As with registration of the trust, there will be no penalty for a first offence of failing to keep TRS up to date within the timeframes, unless it is a deliberate non-compliance. Deliberate non-compliance will result in a £5,000 penalty per offence, as above.

If you have questions regarding HMRC’s Trust Registration Service, please get in touch with The Wilkes Partnership’s Trust Solicitors on 0121 733 8000.

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