In 2017, HMRC launched the Trust Registration Service as a result of the record keeping and disclosure obligations introduced by the UK’s implementation of the EU Fourth Money Laundering Directive.

Trustees of "relevant taxable trusts" are now required to provide the HMRC Trust Register with certain information on their settlors, beneficiaries, power holders and assets.

In the broadest terms, for now, only trusts where the trustees incur a liability to income tax, capital gains tax, inheritance tax, stamp duty land tax, stamp duty reserve tax (or land and buildings transaction tax in Scotland) on any UK source income, directly held UK assets, or assets (and income arising on those assets) held through an underlying entity which is "look through" for relevant tax purposes (e.g. a nominee or a partnership) are required to register and report. This is covered in more detail in our note "The Trust Registration Service - Impact for non-UK resident trustees".

This “tax consequence test” was removed by the Fifth Money Laundering Directive (5MLD) which was passed by the EU on 9 July 2018, bringing many more trusts within the scope of this reporting requirement for the first time.

The Trust Register is not currently accessible to the public, although law enforcement agencies are entitled to access the information. However, this may also be amended in light of the enhanced requirements of the 5MLD, which requires access for anyone with a legitimate interest in the data.

The UK has until 20 March 2020 to implement the enhanced trust registration requirements of 5MLD and we expect the UK Government to consult on the changes in late 2018 or early 2019.

The UK Association of Taxation Technicians has calculated this week that the removal of the tax consequence test is likely to increase the number of trusts required to register from approximately 200,000 to up to 2,000,000. Many of these trusts will have lay trustees, who may struggle with the complexity of their new obligations or be unaware of them.

For now, trustees should be aware of the likely changes and we will produce a further update once the consultation has been published.