HM Treasury have launched a consultation “Transposition of the Fifth Money Laundering Directive”, which could increase the number of trusts that need to be registered with the Trust Registration Service (TRS) to over a million.
The Fifth Money Laundering directive (5MLD) is an EU directive which member states must implement by January 2020. Depending on the terms of the UK’s EU exit agreements there may be a period where we must implement 5MLD and the government is catering for this scenario.
The TRS came about as a result of the fourth money laundering directive and under the 5MLD proposals the following would have to reported to HMRC through the TRS whether they have UK tax liabilities or not:
- all UK resident express trusts
- non-EU resident express trusts that acquire UK land or property either on or after 10 March 2020
- non-EU resident express trusts that enter into a new business relationship with a UK obliged entity on or after 10 March 2020
“Obliged entities” are those already within the scope of the Money Laundering Regulations (MLR) such as accountants, auditors, and tax advisers.
5MLD would expand this in relation to tax matters to include “any other person that undertakes to provide, directly or by means of other persons to which that other person is related, material aid, assistance or advice on tax matters as principal business or professional activity.”
The government proposes that, following the transposition of 5MLD:
- Unregistered trusts already in existence on 10 March 2020 would have until 31 March 2021 to register on TRS
- New trusts created on or after 1 April 2020 would have to be registered within just 30 days of their creation.
The consultation closes on 10 June 2019. Responses to:
A more detailed technical consultation run by HMRC will be published later in 2019 which will include consulting on a new non self-assessment linked penalty regime for late registration under the TRS.
Links to our guides:
Money Laundering Checks: know your client
External link:
Consultation: Transposition of the Fifth Money Laundering Directive
