The drive towards global transparency to tackle terrorism, money laundering and tax evasion moves forward increasingly quickly.
Whilst the fight against these activities is to be welcomed, what is perhaps less welcome is the compliance burden which trustees now face.
As reported by Helen Ratcliffe in our last issue of Individual Matters this drive has resulted in recent years in many new disclosure initiatives which affect trusts including FATCA, trust reporting for trusts with a French connection, and PSC Registers. All this has resulted in a plethora of acronyms!
Here we look at two further developments which impact on trusts: the need to obtain an LEI (which gives us yet another acronym), and the implementation of the new Trust Register with HMRC.
In order to enable the London Stock Exchange to verify the source of funds entering the market, from 3 January 2018 entities (including trusts) must have a Legal Entity Identifier (LEI) in place or they will not be able to buy, sell or transfer listed shares. In order to obtain an LEI, trusts must provide certain information such as the names of the trustees and settlor. There is an initial application fee of £115 plus VAT. The LEI must be renewed each year and any changes noted for an annual renewal fee of (currently) £70 plus VAT. Bare trusts do not have to obtain an LEI.
Many investment managers are offering to provide this service for their clients and this is likely to be the easiest option for many, but trustees should liaise with them regarding the information that is to be provided.
In order to meet its obligations under the fourth Anti-Money Laundering Directive the UK has introduced an online Trust Register. Trusts with a 'UK tax consequence' during a tax year will need to be registered. Trustees are now obliged to gather information to identify the settlor, the trustees, the protector (if any) and the beneficiaries and provide this to HMRC. This is not a 'one off' event. If there is a change of trustee for example, the Register will need to be updated.
There have been delays in its implementation, but the current timetable is that existing trusts must register by 31 January 2018.
At the time of writing, there are still many outstanding questions on how exactly trustees must comply with these obligations. The professional bodies are seeking clarification on these and it is hoped that more detailed guidance from HMRC will be forthcoming.
Our highly experienced trust management team will be able to assist if you have any queries about obtaining an LEI or the new online Trust Register.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.