The latest Guidance documents clarify when HMRC will issue the trustees with a penalty charge for not registering a trust or not keeping the entry up to date, how to ask for a review or appeal the charge and how to pay it.
Our earlier Bulletin explained the penalty system for not registering a trust or not keeping it up to date. This followed HMRC’s announcement of the level of fine being set at £5,000 but also stating that they will not penalise trustees for first-time offences.
The new Guidance notes now have more detail of the penalty regime. There are three Guidance notes dealing with:
The guidance confirms that if you’re a trustee of a trust within the scope of the trust registration service (TRS), and you either fail to register your trust or fail to keep the information held on the TRS up to date, HMRC can charge you a fixed penalty of £5,000. They will not charge any interest on penalties.
However, given that registering a trust is a new requirement, HMRC recognise that trustees may not be familiar with the process. They will, therefore, not charge a penalty if they find out that you’ve failed to register or to maintain a trust, as long as:
- this was not deliberate behaviour;
- you take action to correct this within the time limit HMRC has set.
HMRC will only charge the trustees a penalty if the failure to register or update was deliberate.
HMRC will decide on whether to charge penalties on a case-by-case basis.
Upon receipt of a penalty letter from HMRC, the trustees can simply pay the penalty charge or if they do not agree with a penalty charge, they can:
- ask HMRC to review their decision; or
- make an appeal to a tribunal against a decision.
A review request must be sent directly to HMRC and must reach it within 30 days of the date the penalty letter is issued. HMRC’s reply will normally be sent within 45 days of receipt of the taxpayer’s request. HMRC will not try to collect the penalty while it is reviewing the decision.
Taxpayers who do not want to ask for a review, or whose request for a review is rejected, can appeal to a tribunal within 30 days of the date of the penalty decision letter or the letter announcing that a review has been rejected. In the latter case, however, HMRC reserves the right to collect payment of the penalty while the appeal is in.
So far, we are not aware of any penalties having been issued for failure to register or failure to keep the Register up to date. Nevertheless, given the detail of the Guidance notes, this is clearly something that has been on HMRC’s mind and indicates they are preparing to use their powers. Trustees who have not yet registered their registrable trust on the TRS should be reminded of their obligation to do so. New registrable trusts have 90 days from the trust’s creation to register. The original deadline for existing trusts was 1 September 2022. Ideally, trustees should not wait for a nudge letter from HMRC before registering. Prompt registration will avoid having to explain the reasons for any failures and of course the risk of penalties.
Services available from Technical Connection
TRS Mezzanine service
If you require further guidance registering trusts, there are the following resources available:
On Techlink, we have created a series of documents and videos to help you guide your clients through the registration service, and these are accessible here.
In addition to the online guides, we provide a comprehensive TRS Mezzanine service which can you book here.
This is an opportunity for either you or one of your support team to receive step by step guidance on how to create a Government Gateway Organisation ID and step by step guidance on how to complete HMRC’s Trust Registration Form. Through screen sharing over Zoom one of our consultants will talk you through the completion process.
Additionally, you can choose to have the Mezzanine with one of your lead trustee clients attending. You should include their name and email address on the booking form. This Mezzanine incurs a fee of £60 (£50 plus VAT).
Please note that these Mezzanines are specifically designed to help guide you or your client through the administration of the TRS, as such the attending consultant will not be available to answer technical questions regarding the trust.
If you have a technical question about a trust, our ASK service is available as an add on subscription to Techlink.
Book your appointment here.
TRS Agency Service
As part of our support framework surrounding the trust registration requirements, we are now providing a TRS Agency service. Acting on behalf of your client we can register the trust ourselves. The use of our Agency Services incurs a fee of £200 for up to 60 minutes on receipt of Technical Connection’s invoice.
To book the TRS Agency Service or for further details and any other queries, please contact via email at firstname.lastname@example.org
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