Many of us no doubt have marked in our calendars a very special occasion – July this year will mark the 9^th birthday of HMRC’s Trust Registration Service!

Sorry, what is the Trust Registration Service?

The Trust Registration Service, or TRS, is a branch of HMRC with whom many trusts in England must be registered, though there are exceptions. Crucially, you have to register trusts with the TRS whether or not there is tax to pay on the trust.

All trusts that were registrable with the TRS were meant to have been registered by 1 September 2022, with any new trusts after that date being registrable within 90 days of creation of the trust. HMRC can issue fines for failing to register a trust or to keep the registered details up to date. The obligation to register with the TRS falls on the trustees of the trust.

The problem is that many people do not realise they are trustees of trusts, and so do not realise they have to register with the TRS. Whilst this may not have been much of a practical problem previously, more and more financial institutions require evidence of registration with the TRS before granting access to funds when those funds are held in a trust registrable with the TRS. Also, solicitors may require evidence of registration with the TRS before dealing with any trusts registrable with the TRS.

Take it back a step. What is a trust?

Put simply, a trust is a way of holding assets so that one person or group of people (the trustee or trustees) hold assets on behalf of someone else (the beneficiary or beneficiaries). Sort of like a company, a trust is its own structure, separate from the people who run it. This means that just like how the directors of a company can change but the company continues to exist, the trustees of a trust can change but the trust itself as an entity continues to exist. When you create a trust, you are creating an entity to hold the assets you put into the trust.

The problem is that lots of people hold investments in trusts without realising they are in trusts. This is because it is common financial advice when taking out some kinds of investments to write the investment into a trust, and often people just sign all the paperwork for the investment without necessarily realising what they are doing. 

People may think they own their investment in their own name, but actually, they have set up a trust to own the investment for them and appointed themselves or family members as trustees of that trust. People do set up trusts for other things, like trusts for their house or trusts that arise out of someone’s will when that person dies, but hopefully, people are more aware of those trusts. When it comes to investments, however, we see families who do not necessarily realise that trusts were set up in the first place.

This is why it is important that if you hold investments to check the paperwork you signed or speak to the investment provider to find out if it is held in a trust. If so, that trust may need to be registered with the TRS for you to access the funds in the investment. Whether the investment is held in a trust can also have tax consequences.

So, what should I do about this?

It is worth checking with any investment providers with whom you hold investments, whether those investments are held in a trust. If you have a financial adviser who set up the investments, you can ask them as well.

If you are a trustee of a trust and you do not think that trust has been registered with the TRS, it is important to register it with the TRS if that is required. You can read further about the TRS here: Register a trust as a trustee - GOV.UK.

If you want assistance with registering a trust with the TRS, or are not sure whether you need to register a trust with the TRS, you can also contact me to discuss this.