We have chronicled the debacle of the trust registration service (TRS) for nearly a year (summarised in our newsletter on 7 December 2017), and now HMRC are seeking to impose penalties on trustees who fail to meet the TRS filing deadlines.
In brief those deadlines are:
- For registering a trust for SA the first time: 5 October after tax year end, – extended to 5 January 2018 for 2016/17 SA returns.
- Registering existing trusts with the TRS: 31 January 2018 – but no penalties to be charged if registration was completed by 5 March 2018.
The penalties for late filing will be:
- Up to three months late: £100
- Three to six months late: £200
- More than six months late: greater of £300 and 5% of all relevant taxes paid by the trust in the relevant tax year.
“Relevant taxes” may include: income tax, CGT, IHT, SDLT, LBTT, LTT and SDRT.
However, this is only the administrative penalties. As the TRS was introduced under money laundering legislation, HMRC also have the power to apply penalties for money laundering offences under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations (SI 2017/692). HMRC is to consult on how those money laundering penalties may be applied.
Late filing penalties will not be applied automatically for TRS registrations made in 2017/18, but this concession may not apply for trust registrations made in 2018/19. HMRC say they will apply penalties where they believe the trustees did not take reasonable steps to comply with the regulations.
In view of the chaos and confusion which surrounded the TRS in 2017/18, and the adverse weather in the week to 5 March 2018, there should be ample reasonable excuses available for late filing.
Written by the Tax Advice Network