HMRC have published a response to their consultation ‘Fifth Money Laundering Directive and Trust Registration Service’ which includes a list of trusts which will now be exempted from registration and a concession relevant to non-UK trusts.
The exclusion of certain types of trusts follows representations from professional bodies that the proposed changes to the rules for trust registration, due to be introduced from March 2022, were too wide. They could adversely affect the ability of the UK professional services market to compete internationally.
Trusts which will be excluded from registration under 5MLD include:
- Will trusts created on death which only receive assets from the estate/death benefits life insurance. They should be wound up within two years.
- Critical illness and disablement and pure protection life insurance policies.
- Registered pension schemes.
- Existing pilot trusts holding less than £100.
- Trusts for joint ownership of property.
- Charitable trusts.
- Personal injury trust.
The government has confirmed that:
- Non-UK trusts who enter into business relationships with UK advisers will not have to register under the Trust Registration Service (TRS) unless they have at least one UK trustee.
- There are no proposals to extend the 30-day deadline under which new trusts will be required to register under TRS with effect from 9 February 2022.
- Third parties will be able to apply to HMRC for information such as personal details of the beneficial owners of a trust where:
- There is a 'legitimate interest' and it relates to investigations into money laundering or terrorist financing.
- For any reason if the trust owns a controlling interest in an entity outside of the UK/EEA.
Fifth EU Anti-Money Laundering Directive checklist
This checklist incorporates the changes made by Anti-Money Laundering Directive 5. This is designed to be illustrative only and should give some insight into the changes you will need to make to your own systems in reviewing your existing clients.
Trusts have been used in various forms for tax planning purposes for many years and the tax legislation has had to evolve with them.
Non-resident trusts have long been used for tax planning purposes and as a result, the legislation has been changed many times in order to deal with perceived tax avoidance.