Requirement To Update Trust Information With HMRC Annually

Over the past few years HMRC have brought in more requirements for the registration of Trusts and also the continual updating of Trust information through the Trust Registration Service (TRS).

The full functionality of the new TRS is now available, allowing trustees and agents to:

• Register all types of trusts and estates

• Make changes to all types of trusts and estates

• Declare “no change” in respect of all types of trust

• Close a trust or estate

The next deadline to be met is 31st January 2021. This affects all trusts where there has been or is a liability to tax of any kind. By this date the Trustees are required to confirm online any changes that have occurred or to submit a declaration that no changes have happened since the initial registration.

To do this the Trustees need to create a Government Gateway User ID for the individual Trust (if they don’t already have one).

As agents we are not able to create these accounts for you, but we can help with the information you might need to pass the security hurdles and to navigate through the process in general. If we did the initial registration of the Trust for you we can provide you with a copy of the information used. You will also need the Trust tax reference (UTR) to hand.

To start the process to create an User ID, follow this link https://www.gov.uk/guidance/manage-your-trusts-registration-service

Step By Step Guide To Creating A User ID And Updating The Register

Step 1: A trustee sets up a government gateway user ID

A trustee needs government gateway credentials for each trust they administer to appoint an agent to update the TRS for that particular trust, or to update the register themselves. If you have already got User ID credentials for the trust, you can go straight to step 2.

To set up a government gateway user ID for the trust:

Following the link above, scroll down the page almost to the end and click on the green ‘Start now’ button. This takes you to a page headed Sign in using Government Gateway. Click on Create sign in details which is under the green sign in button.

The trustee will then be asked for details of their own email address and name and to set up a password and recovery word. They will then be issued with a government gateway user ID - all before telling HMRC what the ID will be used for.

Once the user ID has been created, the trustee will be asked for the type of account they need. The correct account to select for a trust is Organisation.

For digitally excluded trustees who can’t set up a government gateway user ID, please see below.

Step 2: A trustee needs to claim the trust

In order to ‘claim’ the trust, the trustee should either continue the process above or, if they have had to log out for any reason, go back to the link above and follow the Start now green button at the bottom of the page again and use the credentials already created in step 1 to log in.

The trustee will need:

• The trust’s UTR

• Details of the trust’s original registration

The trustee will be asked to provide details that HMRC already knows about the trust from the original registration (or the latest update) in order to ‘claim’ it. This could be the name, date of birth and national insurance number of the lead trustee or another person associated with the trust – which could be one of the trustees, beneficiaries or settlors. The trustee can check the details entered and will be told if they have successfully claimed the trust.

If the trustee does not enter the correct details, they will get a message that their answers do not match the details HMRC holds about the trust. Trustees will have three attempts to enter the correct information. If they are unsuccessful after the third attempt they will be locked out and will have to repeat the process after 30 minutes.

We have had reports that problems can arise where, on original registration, details of (say) a beneficiary’s passport number was provided rather than a NINO. We are looking into whether this is causing problems that might prevent a trustee claiming the trust.

Once you have successfully claimed your Trust, please let us know.

Step 3: The agent issues an authorisation link to the Trustee

Once you have notified us that you have claimed the Trust, we will need to create a link for you to authorise us as your agents.

Step 4: The Trustee authorises the agent

The trustee needs to click on the link sent by us as the agent within seven days. This will take you to an appointment message from where you can sign into your Government Gateway account using the credentials that you created up in Step 1.

The trustee will then be presented with the option to authorise their agent and to give their consent to HMRC allowing the agent to maintain the trust. The Trustee will be presented with a message that the approval has been completed, and explains what you can do next.

Step 5: Agent logs in to update the register

Once the Trustee has accepted our appointment as agent , we can go to Manage your trusts' details and log in with our credentials to access the trust and update it.

Trustees are required to update the register for any changes to details of their beneficial owners. The legislation also says that trustees should update the register for other changes, including changes to advisers, the place where the trust is administered and country of tax residence.

Once the register has been updated, the whole updated register entry can be saved as a PDF, including a declaration to confirm the register has been updated.

Hint and tips for updating the register

The following comments and observations may help trustees to navigate the process.

Page not found

The trustee must complete steps 1 and 2 above to set up a government gateway user ID for each trust for which they are responsible and ‘claim’ that trust. This must be done before the agent attempts to request authorisation to maintain the trust from their ASA.

If the trustee attempts to accept the agent’s invitation without first ‘claiming’ the trust they will receive a page not found error message.

The trustee needs to claim the trust in order to link the trust’s UTR with the government gateway credentials (ie, the user ID and password) that they have created for it.

Enter credentials in the right place

It’s also important to understand that after a set of government gateway credentials has been created, where they take you in HMRC’s systems when you sign in depends on which part of GOV.UK they are entered into.

Clicking various green buttons within HMRC like Start now, Register now, etc, all generally take the user to what looks like a common sign in screen. However, while the sign in screen looks the same, where the user ends up after entering their credentials very much depends on which page they started from on GOV.UK pages.

Self assessment online and the trust register are not linked

Another common assumption is that the trust register is linked to self assessment. It isn’t. Logging into the trust’s business tax account using the trust’s credentials will not give access to the TRS.

Trust credentials are separate from trustees’ personal credentials

Any trustee who already has a personal tax account in their own name needs to understand that the trust’s credentials are something completely separate from their own.

Further Reading

The TRS opened for registrations in 2017 but, while trustees and agents could register trusts, they were unable to update the data originally submitted for any changes to details of trustees, settlors and beneficiaries until April 2020 when this functionality was released.

Whether there is an obligation to update trust details on the register depends on whether the trust has incurred a tax liability.

Under the current regulations, if there is a tax liability in the year in which the change occurred, trustees are required to update the data on the register for those changes by 31 January following the tax year in which the change occurred. If there was no UK tax liability in the tax year the change occurred, the requirement to update is deferred until the 31 January following the next tax year in which a tax liability arises. (Note that tax liability is not limited to just income tax or CGT as might be suggested by the link to tax years, but can include SDLT/LBTT/LTT, IHT and Stamp Duty Reserve Tax.)

If there are no changes to trust data in a tax year, but the trust has incurred a tax liability during the period, the trustees must confirm via the TRS that no changes have occurred and that the details on the register are up to date on or before 31 January following the tax year.

Question 20 on self assessment tax returns

Trusts within self assessment must confirm that they have either updated the register or confirmed the details are correct by completing question 20 of the SA900 return.

On 2017/18 and 2018/19 returns trusts were permitted to leave this question blank because the functionality to update the register did not exist. For 2019/20 returns the question must be addressed.

If a trust has incurred a tax liability in 2019/20, the position is straightforward: the trustees must access the TRS to either update the register or confirm that there have been no changes to the information previously submitted and this must be done by 31 January 2021. Those within self assessment must confirm they have done this by answering question 20 appropriately or HMRC may enquire into the return.

If a trust has not incurred a tax liability in 2019/20 but a change has occurred during that year, the trustees must update the register by 31 January following the next tax year in which a tax liability does arise.

For trusts where the details changed in either 2017/18 or 2018/19 the position is more complex.

If the trust did not incur a tax liability in the same year as the change an obligation to report has not yet arisen. If it did incur a tax liability in the year of change the reporting deadline would have been 31 January 2019 or 31 January 2020 depending on the year of liability. However, since it was not possible to report changes at those points, trustees did not have to take any action.

We understand that if an obligation to report changes arose in 2017/18 or 2018/19 with either a 31 January 2019 or 2020 deadline, the trustees should now take steps to update the register by 31 January 2021. This is regardless of the liability position for 2019/20. In other words, if there was a change before 6 April 2020, and a liability for any of the three years 2017/18 to 2019/20, details must be updated by 31 January 2021.