Significant number of trusts still to register on TRS before September deadline
The Trust Registration Service (TRS) has received only 153,241 trust registration applications since it began full operation in June 2017, a Freedom of Information Act 2000 request has shown.
Up to one million new and existing express trusts, even those without tax consequences, must be registered with the service by 1 September 2022. Almost 170,000 trusts will need to be registered every month between now and then to meet that deadline, says Canada Life, which submitted the freedom of information request.
HMRC is still developing the penalty regime for late submissions, but its initial proposals suggest that trustees who fail to register could face penalties of up to 5 per cent of the trust's tax liabilities or GBP300, whichever is greater. Financial penalties may be waived for first offences, although this is not yet definite.
The registration data supplied by HMRC in response to the freedom of information request is broken down into monthly periods from the beginning of TRS operations in July 2017 until January 2022.
It shows a surge in registrations in the early part of 2018, coinciding with the original deadline set for registration of trusts with a tax liability. After that, the numbers fell to only a few hundred each month, although they began to pick up slightly in September 2021.
'We are already seeing a gradual uptick in registrations in 2022 in advance of September's deadline', says Canada Life Tax and Estate Planning Specialist Stacey Love. 'Given recent estimates that one million registrations may need to be completed, I suspect HMRC will experience a flood of registrations over the coming months.'
HMRC's experience of the spike in registrations in the first quarter of 2018 may help it ensure the current system is ready for the expected surge, says Love. However, she stresses that advisors should be encouraging their trustee clients to register well ahead of the deadline.
