A very effective method of IHT and Estate Planning often recommended to our clients by ourselves and their legal advisers, is to settle assets, typically money which is then invested, into Trust and as part of the recommendation the Trust often invests via an Offshore Investment Bond, one of the benefits of which is to avoid generation of income and therefore tax returns needing to be completed.
Currently Trusts are required to register with the Trust Registration Service only when a tax liability arises.
The EU Fifth Anti-Money Laundering Directive (EU 5MLD) regulations came into force on 10 January 2020 and initially included requirements to extend the Trust Registration Service to all “express trusts” (those clearly created by the settlor, usually in the form of a written deed of trust) irrespective any tax liability.
However, whilst the EU 5MLD came into force, the Trust Registration Service aspects of the regulations were not introduced and were being consulted on. This consultation ended on 21 February and the legislation must be implemented by 10 March 2020.
Information on the settlors, trustees and beneficiaries will need to be provided; in summary, the proposals are that:
Any existing Trusts established as at 10 March 2020 will need to be registered with the Trust Registration Service by a proposed date of 10 March 2022.
- Trusts created after 10 March 2020, will need to be registered within 30 days, or by 10 March 2022 if later;
- Trusts created after 10 March 2022 must register within 30 days.
Any Trusts already registered (i.e. those who have reported a tax liability), will need to provide additional information.
Where a Trust solely consists of a policy which is pure protection (life assurance) and payment is not made until the death or terminal illness of the insured, it is proposed that these Trusts will not be required to register as this would be disproportionate to the risk of them being used for money laundering or terrorist financing activity. (Finally, a common sense approach from HMRC!).
We will of course provide our clients with guidance on this as the detail of the requirements become known.