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TRUST COMPLIANCE IN 2018 – KNOW YOUR OBLIGATIONS
Trust compliance in 2018 – know your obligations By Rachel Sugden, wills, probate & trusts solicitor at Willans LLP
Trustees have found themselves subject to a raft of new requirements lately. Rachel Sugden in Willans’ wills, probate and trusts team explains these new obligations and how trustees can meet them.
The last few years have seen a dramatic increase in trust regulation. The penalties for non-compliance can be onerous so here’s a quick look at these new regulations:
• Trust Registration Service (TRS): In April 2017, HMRC withdrew the former process for reporting trust tax liabilities (income tax, capital gains tax and stamp duty land tax) and introduced the new TRS in its place. The TRS is a one-stop online portal for the filing of trust tax returns. All trusts (and certain complex estates) with UK tax liabilities must now register with the TRS before 5 October following the tax year in which a liability arises.
• Legal Entity Identifier (LEI): Since 3 January 2018, all legal entities invested in capital markets are required to obtain a unique reference code (or LEI) in order to trade. “Legal entities” include trust funds directly invested in stocks and shares here in the UK and/or in foreign markets. Applying for an LEI is a straightforward process, but without it, any future transactions cannot be processed. This may interfere with your trust’s investment strategies.
• Global reporting requirements: The Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS) implement new global reporting standards allowing tax authorities to access financial data relating to their residents’ investments overseas. These alliances impose the requirements for certain trustees to register trusts for international reporting purposes. Registration itself is not limited to trusts with a foreign element and so it is vital that all trustees consider whether registration is required to avoid hefty penalties.
Whilst many trusts will not currently fall under the scope of these regulations, the nature of a trust and the assets it holds can change over time. Therefore, trustees should review the position annually to ensure that the trust remains compliant. If you need assistance with any of the issues mentioned above, please contact us on 01242 514000.
Rachel Sugden is a solicitor in the wills, probate & trusts team at Willans. Rachel helps clients with wills, lasting powers of attorney, inheritance tax planning, trusts and estates administration. She is a full member of professional body STEP (the Society of Trust & Estate Practitioners).