A Freedom of Information request to HMRC has revealed that only 153,241 UK Trust registrations have been received since the Trustee Registration Service began in June 2017, despite estimates suggesting up to one million trusts could be required to register by the deadline says Canada Life.
The deadline for the majority of express trusts to be registered on the service is 1 September 2022 with the onus on trustees to register trusts through the HMRC portal by the deadline.
A penalty regime for late submissions is still being finalised but initial proposals have suggested those trustees who fail to register could face penalties of up to 5% of any tax liability or £300, whichever is greater.
The data from HMRC shows a surge in registrations in the early part of 2018 which coincides with the original deadline for the registration of Trusts with a tax liability and we are already seeing a gradual uptick in registrations in 2022 in advance of September's deadline.
Stacey Love, tax and estate planning specialist at Canada Life said: "We've had a strong start to the year for successful registrations but given recent estimates that one million registrations may need to be completed, I suspect HMRC will experience a flood of registrations over the coming months. This means that almost 170,000 trusts would need to be registered each month to meet the deadline.
"It is to be hoped that HMRC has used its past experience of the spike in registrations in Q1 of 2018 to ensure the current system is ready for the expected surge, but it's important that advisers encourage their trustee clients who may be impacted to register well ahead of the deadline."
