Background

The Trust Registration Service (TRS) is a register of express trusts that have a liability to pay one of the following taxes: capital gains tax, inheritance tax, stamp duty land tax (SDLT) and stamp duty reserve tax. It was introduced in 2017 by the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 and set out in EU’s Fourth Money Laundering Directive.

The scope of the TRS was extended by the Fifth Money Laundering Directive implemented by the Money Laundering and Terrorist Financing (Amendment) Regulations 2020 which came into effect on 6th October 2020. Since the Fifth Money Laundering Directive, all trusts (whether taxable or not) need to be registered on TRS unless the trust is specifically excluded.

The trusts caught in the new scope include all UK express trusts and some non-UK express trusts, in existence on or after 6th October 2020.

In simple terms, an express trust is created by a settlor by way of a written document, such as a Will, deed, or declaration of trust, to take effect either during their lifetime or after their death. Trusts which are implied, arise on intestacy or are created by court orders are not express trusts which are subject to TRS.

Trustee Responsibilities

If you are a trustee of a trust that is registrable, you are expected to register the trust on TRS via the Government Website or arrange for an agent such as an accountant or solicitor to register the trust.

It is important to note that trusts that were in existence on or after 6th October 2020 but have been closed since need to be registered on TRS and then the trust record must be closed.

Declarations of Trust

Co-ownerships trusts such as declarations of trusts set up by joint property owners to hold property for themselves as tenants in common are excluded from TRS registration requirements. However, the exclusion does not apply if the legal and beneficial owners are not identical. For example, in a scenario where there are two people on the title of the property but three people have a beneficial interest in the property, the trust would need to be registered on TRS.

Penalties

HMRC may issue financial penalties on the failure to register a trust or for late registration of a trust.

There is no penalty for a first offence to register a trust or for late registration of a trust unless the failure to do so is due to deliberate behaviour of the trustee. Where HMRC finds that the failure to register a trust has been deliberate, HMRC may impose fines of £5,000 per offence.

HMRC have stated that they will initially adopt a light touch to penalties if trusts are not registered by 1st September 2022 given the new registration requirements.

More information about the TRS can be found in the HMRC Trust Registration Manual

For further advice and assistance please contact our Private Client Team on 01604 828282 / 01908 660966 or email info@franklins-sols.co.uk

Companies House is the United Kingdom’s register of companies that all Directors and Shareholders should be familiar with. It is essentially an online tool akin to a treasure trove of information for corporate clients and solicitors alike. COVID-19 has however undoubtedly disturbed the running of this well-oiled Government machine, meaning that new measures have been put in place to overcome these unprecedented difficulties. This Article is intended to make you aware of some of these important changes.

Office Access & Filings

With social distancing measures in place, as well as reduced staffing levels, Companies House have closed their telephone contact centre, as well as their offices in Belfast, Edinburgh and London. You can however still email them at enquiries@companieshouse.gov.uk, send them documents by post to their London office, deliver paper documents to the Belfast / Edinburgh office or visit them at their Cardiff office, which according to their website is open 24 hours a day. Same day services are also currently suspended and you should expect delays in relation to the processing of paper documents. It is much more efficient to file documents online instead using WebFiling.

An interim emergency service has been created at https://beta.companieshouse.gov.uk/efs-submission/start which enables paperless filing in relation to filing a registrar’s powers document. This would normally be sent in paper format.

Filing Accounts

All private limited and public companies must file their accounts at Companies House, along with unlimited companies in certain circumstances. This is a statutory duty imposed by the Companies Act 2006. The failure to deliver accounts on time is a criminal offence that also carries a civil penalty. This can reach up to £1,500.00 for private companies and up to £7,500.00 for public companies. From the 25th March 2020, businesses have been able to apply for a 3-month extension for filing their accounts. If the reason that you are requesting an extension relates to COVID-19 then it will automatically be granted.

Nonetheless, it is important to note that the Companies House website specifically states that companies which have already extended their filing deadline, or shortened their accounting reference period, may not be eligible for an extension. Also, if your accounts are filed late the penalty will be automatically imposed and the registrar has a very limited discretion to not collect it.

Strike Off

Under section 1000 of the Companies Act 2006, if the registrar has reasonable cause to believe that a company is not carrying on business or in operation, they may start the statutory procedure for striking its name off the register and subsequent dissolution. This could typically come about due to a failure to submit an annual confirmation statement or accounts on time.  Companies House have now paused the strike off process to prevent companies from being dissolved. This gives company Directors time to deal with the administrative side of their statutory duties.

Annual General Meetings

Under section 336 of the Companies Act 2006, public companies and private companies (if they are traded companies) are obliged to hold an Annual General Meeting within either 6 or 9 months of their accounting reference date. The Government announced that it will be introducing legislation to ensure that companies whose AGM date is fast approaching are able to do so safely and flexibly, such as conducting this online. Please however note that the requirements of a valid general meeting, such as quorum, which are detailed in a company’s articles of association are still applicable.

Pay Stamp Duty

A Stock Transfer Form is, as the name suggests, used to transfer shares from one person to another. You must no longer post stock transfer forms to HMRC and you should email them instead to stampdutymailbox@hmrc.gov.uk. E-signature will be accepted while COVID-19 measures are in place. To pay the stamp duty owed you must now pay electronically by Faster Payment, Bacs or Chaps. Cheques will not be accepted. You must then email HMRC with the details of the transaction. Further guidance can be found here.

If you would like further information on Companies House filing requirements, please contact Andrea Smith and the Business Services team on 01604 828282 / 01908 660966 or email andrea.smith@franklins-sols.co.uk.

A recent survey conducted by Saga has revealed that a stamp duty exemption for those wishing to downsize would encourage those taking part in the survey to move home.

The survey revealed that 73% of those taking part over the age of 50 would support a move of one free stamp duty move if they were to be downsizing. Furthermore, 25% of respondents suggested that the cost of moving home was a serious deterrent in deciding whether to move, despite being otherwise keen to move due to their current property now being too large, or wishing to reduce the day to day running costs of their house.

Supporters for the move say that the removal of stamp duty for downsizing would free up more houses for younger buyers, making it easier for first time buyers to get onto the property ladder. The government has of course already shown their intention to assist first time buyers with their own stamp duty exemption, and it will be interesting to see whether further support in this form will be agreed.

For now the position remains unchanged and stamp duty will continue to be charged at the usual rate regardless of whether a buyer is downsizing. Pressure is however being applied to the government to reconsider its position.

For advice relating to stamp duty on your property purchase, contact our expert Residential Property team on 01604 828282 / 01908 660966.