There have been two recent developments with regards to the registering of certain Trusts.
Legal Entity Identifier (LEI)
From 3 January 2018 certain Trusts will be required to register for a Legal Entity Identifier (LEI) which is an initiative designed to create a global data system that uniquely identifies every legal entity or structure, in any jurisdiction, that is party to certain financial transactions.
The obligation to enter into this reporting is dependent on the reportable instrument. The list of example reportable instruments are, but not limited to
Shares - listed (quoted) on a stock exchange for public trading
Exchange Traded Funds (ETFs)
Venture Capital Trusts (VCTs)
Trusts holding only a property and/or cash and/or an Investment Bond(s) will NOT require an LEI.
The 20 digit LEI number would enable each Trust to execute financial transactions. In the absence of an LEI the transaction cannot proceed.
New Trusts requiring an LEI
As highlighted above, the LEI is only required where there are certain financial transactions taking place within the Trust. As a result, they will not apply to the creation of our Pilot Trusts. They will only apply when funds are appointed into a Trust and are entered into a reportable transaction listed above. As we routinely recommend the Investment Bonds for Trust investments, they would also not require the LEI.
Trust Registration Service (TRS)
The new Trust Registration Service (TRS) which allows trustees and agents to register their trusts and Complex Estates, was launched in July 2017. This replaces the 41G (Trust) paper form, which has now been withdrawn. This is now the only way Trusts and Complex Estates can obtain their SA Unique Taxpayer Reference and provide information on the beneficial owners of the trust or estate. Most trusts in the self-assessment system will be subject to TRS reporting requirements.
Trusts which are not required to report include bare or absolute trusts, and trusts where all the income has been mandated to beneficiaries and the trust is no longer required to submit a tax return. As you will appreciate the majority of trusts on which CTTC are trustees (that receive income) our advice has always been to put a mandate in place for the income where practical to do so.
In this first year of TRS, to allow sufficient time to complete the registration of a New Trust or Complex Estate for SA and provide beneficial ownership information, there will be no penalty imposed where registration is completed after 5 October 2017 but before 5 January 2018. We are currently processing any trusts that require registration. Any existing Trusts or Complex Estates will require registration by 31st January 2018.
Under existing self-assessment rules, the trustees (or their agents) must register details of a Trust with HMRC by 5 October of the year after a liability to Income Tax or Capital Gains Tax (CGT) first arises.
The registration is required where the Trust is liable to one or more of the following taxes:
Capital Gains Tax
Inheritance Tax (IHT)
Stamp Duty Land Tax (SDLT)
Land and Buildings Transaction Tax (LBTT)
Stamp Duty Reserve Tax