In our update for September 2017, we reported that the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the New Regulations) came into force on June 26, 2017, the deadline for transposition into UK law of the EU Fourth Money Laundering Directive (the Directive).
The Money Laundering Regulations 2007 (the 2007 Regulations) require trust or company service providers to register with HMRC if they are not authorised by the FCA (or certain other specified professional bodies) and where they are in the business of offering services as a trustee or director of a trustee company.
The New Regulations define trust or company service providers in the same way as the 2007 Regulations, and thus registration will continue to apply to those acting as trustees by way of a business. However, the classification of occupational pension schemes as low risk trusts under HMRC’s existing guidance, meant professional trustees of those schemes were not required to register with HMRC, and this had caused some confusion.
On October 9, 2017, HMRC published detailed guidance relating to the new online Trusts Registration Service, in the form of Frequently Asked Questions (FAQs). The guidance (which is not, however, pensions-specific) aims to clarify the registration deadlines, the issue which had caused some confusion. This is because HMRC's Trusts Register acts as both:
- the beneficial ownership register required under the Directive; and
- the new process by which trustees register trusts which pay certain taxes with HMRC to obtain a unique taxpayer reference and deliver tax returns.
This second point means that deadlines imposed by relevant UK tax legislation are relevant in addition to the registration dates under the New Regulations. The guidance clarifies that the registration deadline depends on whether a trust is already registered for self-assessment for income tax or capital gains tax as follows:
- Trust registered for self-assessment - if the trust is registered already for income tax or capital gains tax (CGT) under self-assessment (SA) and the trustees of the trust have incurred a UK tax liability, then registration must be completed by no later than 31 January after the end of each tax year;
- Trust not registered for SA - if the trust is not registered under SA and has incurred either an income tax or CGT liability for the first time, then registration must be completed by no later than 5 October after the end of that tax year. However, this deadline has been extended to December 5, 2017, for the first year of the Trusts Registration Service only; and
- Trust not registered for SA or does not need to register - if the trust is not registered under SA and has not incurred either an income tax or CGT liability but has incurred either an inheritance tax, stamp duty land tax or a stamp duty reserve tax liability in that tax year, the registration deadline is 31 January after the end of that tax year.
The registration requirement will not affect the majority of schemes. However, trustees should ensure that they maintain up to date and accurate records in relation to all scheme beneficiaries.
Given the possibility of criminal liability and civil fines, we recommend that trustees act as soon as reasonably practicable to determine which of the above duties apply to them. In particular, trustees should review their records to verify whether they contain the necessary information and check whether their schemes have incurred any of the taxes that would require the schemes to be registered with HMRC.
If trustees have any concerns in relation to this issue, their usual Norton Rose contact will be able to offer scheme-specific advice.
View the guidance.