HMRC has written to the Society of Trust and Estate Practitioners (STEP) confirming that penalties for trusts that have not signed up to the Trust Registration Service (TRS) by the 5 March deadline will not be charged automatically but will instead be decided using a risk-based approach
On 8 December 2017 HMRC confirmed that although the deadline for making a Trust Registration Service return would remain as the 31 January, it would not charge a penalty if trustees, or a tax adviser acting on behalf of a trustee, failed to register their trust before the 5 March.
Trusts not registered after the 5 March will not face an automatic penalty as HMRC has decided to take a risk-based approach to calculating penalties, especially where it is clear that trustees have made reasonable effort to meet their obligations under the regulations. HMRC has also said it will take into account that this is the first year in which trustees and advisers have had to meet the registration obligations.
The size of the penalty will reflect the period of delay. The penalties will be as follows:
- registration made up to three months from the due date – £100 penalty;
- registration made three to six months after the due date – £200 penalty; and
- registration more than six months late – either 5% of the tax liability or £300 penalty, whichever is the greater sum.
Penalties can be charged on:
- a requirement to register using the TRS by the due date of 31 January after the end of the tax year in which the trustees pay tax on trust assets or income and
- a requirement to notify any change of information by the due date of 31 January after the end of the tax year in which the trustees pay tax on trust assets or income.
HMRC said: ‘There is currently no facility to notify HMRC of any change of information online and, as such, we will not charge penalties for a contravention of this requirement until the online function is available.’
Report by Amy Austin