UK Trust Register and Register of Overseas Entities
By Sati Virdee, Citroen Wells Chartered Accountants
The Trust Registration Service (TRS) is a register of the beneficial ownership of trusts. The requirement to register applies to UK and some non-UK trusts, with some exclusions, regardless of whether the trust is liable to pay any tax.
The registration is completed using the HM Revenue & Customs (HMRC) online service.
Who do the rules apply to?
The following types of trusts are required to register and fall broadly into the following four categories:
- All UK express trusts regardless of whether they have a UK tax liability;
- Non-UK express trusts with a UK tax liability;
- Non-UK trusts which acquire UK land;
- Non-UK express trusts which have at least one UK resident trustee and enter into a UK business relationship.
An express trust is a trust that has been created from the clear intention of the settlor.
Some trusts are specifically excluded from registration unless they are liable to pay UK tax. These include trusts holding assets of a registered pension scheme, trusts registered as charities in the UK, certain commercial trusts, and some independent products with “Trust’” in the description.
What information must be provided?
Information with respect to the trust, such as the name, trust address, telephone number and date the trust was established, including the place where the trust is registered or administered. Also, identity information regarding the beneficial owners (settlor, trustee, beneficiary and a protector) of the trust, together with details of the nature and extent of their beneficial ownership.
The trustees of taxable trusts must provide information on the assets held by the trust at the time of registration such as money, property/land, shares, businesses/companies, and other assets. This is not applicable to trusts which are not UK taxpayers and which only have to provide information about the beneficial owners.
01 September 2022 if the trust has been in existence between 06 October 2020 and 01 September 2022 or, if later, within 90 days of the trust being created for a trust created after 06 October 2020.
Penalties for non-compliance
Penalties will be applied for a failure to register by the deadline of GBP 100 where registration is up to 3 months from the due date, GBP 200 where registration is made 3 to 6 months after the due date, and where registration is more than six months late, the higher of either 5% of the tax liability or GBP 300.
The Register of Overseas Entities
The Register of Overseas Entities (ROE) has now been in effect since 14 March 2022. The rules will be implemented as soon as Companies House and the Land Registry have systems in place to allow reporting to take place.
The rules compel overseas entities to register if they own UK property, whether commercial or residential, and include information about the beneficial owners of the entities.
The requirements have been introduced by the government to identify anonymous foreign owners of UK property and combat economic crime.
The ROE will be publicly available and allow HMRC to access the information at Companies House. This will assist HMRC’s Connect system to cross reference other information held by the government and received under the Common Reporting Standard data to identify those cases which they wish to investigate.
Definition of overseas entities
An overseas entity is any body corporate, partnership or other legal person that is governed by the law of the country outside the UK. This includes non-UK companies, Usufructs, foundations, and non- UK LLPs with a legal personality.
However, offshore trusts owning UK property directly are not required to register with Companies House as they must be registered through the Trust Registration Service. If an overseas structure includes both a trust and an underlying company or other entity, the offcers of the underlying company must ensure it is registered.
Who and what is a beneficial owner?
A beneficial owner is any person who has:
- More than 25% of the shares;
- More than 25% of the voting rights of the entity;
- The right to appoint or remove director;
- The right to or exercises significant influence or control over the entity; or
- Where a trust or partnership is involved, the right to or exercises significant influence or control over the trust or partnership.
What information needs to be provided and from when does it apply?
For the overseas entity this includes the name, address and basic details. For the beneficial owner, the information will be name, date of birth, nationality, residential and service address, and the date they became the registrable owner of the overseas entity.
It applies to entities that owned an interest in UK property on 28 February 2022 or acquired an interest after that date. For property in England and Wales, the requirements of registration will apply to property acquired since 01 January 1999, and for property in Scotland, it will apply to property acquired since 08 December 2014. Overseas entities that already own UK property will be required to register by the end of the transitional period of 6 months from when the register comes into force. Overseas entities will not be able to buy, sell, transfer or lease property, or create a charge against the property in the UK unless they have registered with Companies House. The requirement to register will apply even where the property is sold prior to the end of the transitional period.
Penalties for non-compliance
There are criminal sanctions for not complying with different parts of the regime including failure to register or providing incorrect information attracting a fine of up to GBP 500 per day or a prison sentence of up to 5 years.
Sati VirdeeGGI member firm
Citroen Wells Chartered Accountants
Auditing & Accounting, Tax, Advisory, Corporate Finance, Fiduciary & Estate Planning
T: +44 20 7304 2000
Citroen Wells’ partners include specialists with years of practical knowledge assisting their international clients including the financial problems facing property investors, dealers and developers. They offer a range of high quality accounting, tax, financial and business services.
Sati Virdee is an experienced tax professional specialising in all aspects of UK personal tax compliance and planning with a particular interest in tax planning for non-domiciliaries. She is a member of the Chartered Institute of Taxation and Fellow of the Association of Taxations Technicians.
Published: GGI Insider, No. 120, July 2022 l Photo: s4svisuals - stock.adobe.com