The UK Trusts Register: Impact for non-UK trusts

1. The UK Trusts Register: Impact for non-UK trusts STEP Mauritius Conference 2019 Catherine de Maid

2. Background Scope of the UK trusts register for non-UK trusts Reporting obligations Reporting deadlines Access & enforcement HMRC guidance 5AMLD Practical Points Points to discuss

3. Background Legislation: Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 came into effect from 26 June 2017 Implementing EU’s 4AMLD 2015/849/EU EU’s 5AMLD came into force on 9 July 2018 and member states have until 10 January 2020 to give effect in local law 5AMLD extends the scope of the Trust Register HMRC Online Register: The HMRC online Trust Registration Service was launched on 10 July 2017 The Trust Register is live on HMRC’s website and accessible to trustees and their agents No ability to amend the Register yet

4. Trusts are non-UK trusts if: • None of the trustees are UK resident • At least one trustee is UK resident; and the settlor was not UK resident and UK domiciled when the trust was set up or when the settlor added funds* *N.b. this differs from the rules for tax residence of trusts which look at the residence or domicile position of the settlor. Scope of the UK trusts register for non-UK trusts Non-UK Trusts must report if: • It’s an express trust (i.e. documented); and • The trust: • receives UK source income; or • has assets in the UK; on which it is liable to pay one or more of the relevant UK taxes** **income tax, CGT, inheritance tax, stamp duty land tax (or the Scottish equivalent) or stamp duty reserve tax

5. Reporting obligations • Name of trust, date established, where resident and administered • Statement of accounts for the trust assets (including values & category of trust assets) • Name of paid tax, legal & financial advisors • Identity of all beneficial owners (including class if not determined) If a non-UK trust is within scope then the trustees must: • Obtain and hold certain information on the trust and (for paid trustees) maintain these trust records for 5 years from the end of the trust and then delete such information • Register the trust with HMRC’s online service by 31 January • Review and update the reported information by 31 January following each year the trust pays one of the relevant taxes Trust information • Full name • Date of birth • NI number / unique tax reference; or • Residential address & (if not a UK address) passport/ID card number • Role in relation to the trust Beneficial owner Information (individuals) Individual information • Full name and UTR • Registered or principal office • Legal form • Register of companies where registered • Role in relation to the trust Beneficial owner Information (entities) Relevant persons?

6. Beneficial Owners includes: The settlor The trustees The beneficiaries including any potential beneficiary in a document from the settlor relating to the trust (i.e. a letter of wishes)* The class of beneficiaries (where not all of the individual beneficiaries have been determined) Any individual with control over the trust. This includes almost all protectors even those with only consent, or veto powers * However the explanatory memorandum to the regulations confirms this will not include someone who is unlikely to benefit from an asset despite being named in a letter of wishes (e.g. if they are only a potential beneficiary if someone pre-deceases them). Beneficial Owners

7. Not all deadlines for registration are contained in the Regulations The register performs two functions: • The register of beneficial ownership envisaged under EU 4th Anti-money laundering directive; and • The means for trustees to register trusts with HMRC for delivering tax returns under Taxes Management Act and Inheritance Tax Act Reporting deadlines

8. Reporting deadlines 5 October 2019 Trusts "set up" or starting to make UK income or gains between 6 April 2018 and 5 April 2019 31 January 2020 Trusts liable to pay one of the relevant taxes during the 2018/19 tax year (if already registered then just need to review and update if any changes)

9. Who can access the register? • “law enforcement authorities”: • HMRC, FCA, NCA, Police, SFO Purpose is law enforcement so not public (for the time being) 5 AMLD proposes making registers of beneficial ownership public Failure to register Potentially severe penalties: • Civil • Fines • Professional sanctions • Criminal • Fines • Imprisonment up to two years • Reputational damage Access and enforcement

10. TRS – frequently asked questions published November 2017 but still listed as draft Express view that offshore trusts owning overseas companies that own UK residential property should be registered on the Trust Register in respect of a tax year when the trustees are liable to IHT STEP wrote to HMRC to clarify its view HMRC now confirmed that it no longer believe UK trusts are reportable in these circumstances. HMRC's reply to STEP also states ‘[a]s you may know, non-UK companies that own UK residential property are already obliged to register with the Department for Business, Energy and Industrial Strategy (BEIS)’. We understand that in subsequent correspondence HMRC has confirmed that the reference to there being an existing obligation to inform BEIS is also incorrect and that that won’t be the case until 2021 HMRC (draft) guidance

11. Policy consultation with HMRC is overdue (winter 2018) followed by a consultation on draft legislation in Spring 2019 Broadens the access to information on beneficial ownership - accessible to those with a “legitimate interest” Requires trustees to register information on beneficial ownership in all cases, not only those with a UK tax liability Article 8 European Convention on Human Rights GDPR 5AMLD

12. Practical points

13. The Burges Salmon Trust Trustees and settlor non UK resident. Settlor is a beneficiary and non-UK domiciled. None of the beneficiaries are UK resident. Trustees own shares in a listed UK company directly. Shares pay dividends on a quarterly basis. Is there an obligation to register? 10 year anniversary? Settlor moves to UK? Beneficiary moves to UK? Beware - Loans to UK resident beneficiaries. Examples