HMRC Guidance on Penalties for Trust Non-registration

HMRC Guidance has recently been released concerning penalties for Trusts Non-Registration. It is now an ongoing requirement to register and maintain a Trust, this is the responsibility of the Trustees. This includes if you are the Trustee of a Trust which was started by you or if you are the Trustee of a Trust that was created by someone else.

What is a Trust?

A trust is a document which enables one person (known as the Settlor) to transfer assets to another person (known as the Trustee) to look after for the benefit of someone else (known as the Beneficiary).

An example of a simple trust would be where monies are left to a child in a Will but they cannot have the money until they reach the age of 18. During this time the trustees have an obligation to look after the money for the benefit of the child. The trustees would usually be allowed to pass money on to the child’s guardian for the benefit of the child whilst at the same time retaining control of the asset.

Trusts can be very complex documents but can also be essential in order to ensure that the best possible solution is offered to all your concerns. Whether you need help establishing a new trust or administering an existing trust our team are here to help.

It is essential to take professional advice before entering into a trust as there can be tax implications for placing assets within trusts, therefore, please visit our ‘Trusts’ webpage. 

HMRC Penalties

HMRC has issued three documents with guidance surrounding the registration of Trusts on its trust Registration Service. The guidance documents explain when a penalty charge will be issued, how to ask for a review or an appeal and how to pay the penalty charge should you be issued one. If HMRC suspects deliberate non-compliance the charge can be up to £5000.

The penalty will be dealt with on a case-by-case basis. The guidance from HMRC states ‘we recognise that Trustees may not be familiar with the process’ and ‘we will not charge you a penalty if we find out that you have failed to register or to maintain a Trust, as long as this was not deliberate behaviour and you take action to correct this within the time limit we set. We will only charge you a penalty if we decide you deliberately failed to register a Trust or update its details.’

Review or Appeal

Trustees who disagree with a penalty charge have the right to request a review or an appeal to a tribunal. To appeal a penalty charge it must be received by HRMC within 30 days of the date the penalty charge letter was issued. HMRC will then reply within 45 days and they cannot collect the charge whilst the decision is being reviewed.

Taxpayers who do not want to ask for a review or if they have a review rejected then they can appeal to the tribunal within 30 days of when the penalty charge letter was issued or the review rejection letter. However, HMRC can collect the charge whilst the appeal is ongoing.

Here is more information on a range of different Trust types which you may find informative:

• Bare Trusts
• Life Interest Trusts
• Property Trusts
• Discretionary Trusts
• Bereaved Minors Trust
• 18-25 Trusts
• Disabled Persons Trusts
• Lifetime Trusts
• Personal Injury Trusts

Our Wills, Probate & Trusts team are always here to help you, if you require any further information don’t hesitate to contact the team at 01302 341 414 or 0114 272 1884, alternatively, you can fill out our online enquiry form!