14th September 2022

UK Trusts, taxation and registration

On hearing that newly crowned King Charles III will not see any of his inherited wealth diminished by the way of IHT, this reminded me that I was asked recently to provide some information to HMRC about a family trust. 

By convention since 1910, after any senior royal dies, the executor of their estate applies to the High Court for the will to be sealed. Unlike us mere mortals, the late Queens will join around 30 others, including Prince Phillip’s and be sealed for at least 90 years.

The HMRC request made me a little curious as I am aware of what that trust should do, assuming that no retro regulation gets in the way. But, it did make me wonder what the HMRC motivation was and who it may be shared with

As a result, I wrote on 10^th August to HMRC with and FOI request as follows:

FOI Request: Since 2017, the UK Government has required all UK residents trusts with a relevant UK tax liability to register with HMRC.

In September 2021 the requirement expanded to catch all existing UK trusts regardless of tax liabilities.

Any information should include names, addresses and personal information for the trustees, beneficiaries and settlors and that the data will only be used for law enforcement purposes.

I would be grateful for you to confirm:

1. Why do you need this information
2. What financial crime/s do you expect to prevent as a result
3. Is this information shared with the police from outset
4. Is this data shared with any other parts of government
5. If so, please confirm examples of how and why

Many thanks for your assistance.

I had a reply back very quickly, 7^th Spetember, it read: 

Assets, Residence and Valuation 

3C/03
HRMC
100 Parliament Street London
SW1A 2BQ 

Email

Thank you for your recent FOI request on the Trust Registration Service (TRS). The infor- mation you have requested is already available within the public domain in a range of publi- cations on gov.uk, for example: 

• Technical consultation: Fifth Money Laundering Directive and Trust Registration Service - GOV.UK (www.gov.uk) 
• Trust Registration Service Manual - HMRC internal manual - GOV.UK (www.gov.uk) 

Rather than pursuing the formal FOI process, which would have resulted in a rejection of your request as the information is in the public domain, we therefore thought it would be more helpful if we closed the FOI request and treated your request as a piece of correspond- ence. I am responding accordingly. 

You asked about the purpose of the information we hold within TRS, and the financial crime we expect to prevent. Trusts are used for a wide range of legitimate purposes by private in- dividuals and organisations, but they can also be used to conceal the beneficial ownership of assets which can facilitate money laundering. Gathering the information we request within TRS increases the transparency of trust ownership, making it more difficult to utilise trusts for crimes such as money laundering and terrorist financing. It also ensures the UK remains consistent with international anti-money laundering standards such as those set by the Fi- nancial Action Task Force and the International Monetary Fund. 

You asked about the circumstances in which the information is shared with the police and with other parts of government. The police and all other law enforcement agencies can re- quest data from TRS at any point to assist with any type of enforcement enquiry. In addition, information can be shared with any person investigating money laundering or terrorist fi- nancing subject to meeting certain criteria as set out here: 

Ask HMRC for information about a trust - GOV.UK (www.gov.uk) 

I hope you have found this response helpful. 

Yours sincerely,

I hope that if any of your clients are asking similar questions this glimpse into HMRC workings can be a useful point of reference. Regarding the Queen’s Will, I suggest you ask your great grandchildren to make a diary note in 2111.

Tax, Trust & ISA, Panacea Comment