Investment struggles and heavy fines – reasons not to delay trust registrations

Since 1 September 2022 almost all trusts, either established or newly set up, need to be registered through HMRC’s online Trust Registration Service (TRS). New trusts need to register within 90 days of creation. Whilst this may seem like an administrative exercise, the consequences of not registering your trust can cause a number of practical problems. Trustees will find that not being registered will delay their ability to obtain advice or invest trust funds, as:

• financial institutions, tax advisors, legal advisors and accountants are required to obtain evidence that a trust has been registered before entering into a new business arrangement with the trust;
• banks will require evidence of a trust registration before a bank account can be opened;
• investment companies will require evidence that a trust has been registered before funds can be invested.

You may think that these will only affect newly created trusts, but even established trusts will have difficulties delaying the trust’s funds from being invested.

There is also the possibility of a penalty from HMRC of up to £5,000 if HMRC decide that the failure to register is a deliberate action.

What information is needed to register a trust?

Collating the information required to register the trust can often be the greatest delay in arranging the registration of a trust. The sooner trustees start to gather the information required, the better. Use the government guidance as your checklist, especially if the trust is taxable.

Who can register the trust?

The registration process is fairly straight-forward and trustees can register the trust themselves. Alternatively, the trustees can appoint an agent to register the trust on their behalf. With specialist and experienced support, trustees can be advised on the requirements for both taxable and non-taxable trusts.

It may take up to 15 working days for the trustees to receive their reference number – either a Unique Reference Number (URN) or Unique Tax Reference (UTR) – following the registration of the trust. Once the URN/UTR has been received, the trustees can then access the trust’s TRS record and download the proof of registration document.

What evidence do I need to provide after registration? 

The proof of registration document shows the trust’s URN or UTR and a summary of the details included in the registration. This can then be provided to financial institutions, tax advisors, legal advisors and accountants to confirm that the trust has been duly registered.

The trustees have a duty to keep the trust’s TRS record up to date and must record any changes to the people associated with the trust within 90 days e.g. change of trustees or the birth of an additional beneficiary.

The institutions with which a trust establishes a relationship have a duty to compare the information recorded on the proof of registration document to the information provided to or otherwise known to them. They may be required to report any discrepancies to HMRC.

Registering your trust may not be top of your list of things to do but – as well as registration being a legal requirement – trustees are likely to find that they run into difficulties until this is completed. Ultimately, registering your trust must be a priority.