Real estate

Jersey Property Unit Trusts may now need to be on HMRC's trust register

Published on 16th Feb 2023

Guidance for unauthorised unit trusts including JPUTs changed on 31 January

Close up of people in a meeting, hands holding pens and going over papers

HMRC has previously advised that, in its view, neither authorised nor unauthorised unit trusts were required to be registered on HMRC's trust register, unless the unit trust became liable to certain UK tax liabilities.  

While HMRC's position for authorised unit trusts remains the same (that they are only required to be registered if a liability to a relevant UK tax arises), HMRC's guidance recently changed on 31 January for unauthorised unit trusts, which includes Jersey Property Unit Trusts (JPUTs), and this widens the circumstances in which an unauthorised unit trust must be registered. 

Registration on HMRC's trust register is now likely to be required for JPUTs not only when they become liable to certain UK tax liabilities but also where JPUTs have acquired UK land since 6 October 2020 and hold it directly or intend to do so. Consequently, the  position of each JPUT should be reconsidered in light of the change to HMRC's guidance.

Which JPUTs will need to be registered?

There are only two situations in which a JPUT may need to be registered.

  • On becoming liable for UK tax. The JPUT will need to be registered if it incurs a liability to UK tax, with the taxes most likely to apply being Stamp Duty Land Tax (SDLT) and Stamp Duty Reserve Tax (SDRT).  SDLT may be triggered when the JPUT acquires UK land directly or via a partnership, or on a change to a lease. Due to a peculiarity of the registration system, JPUTs that register due to an SDLT or SDRT liability, but do not have income or capital gains tax liabilities, should register as non-taxable rather than taxable trusts.
  • On acquiring UK land after 6 October 2020. As an unauthorised trust with no UK resident trustees the JPUT will need to be registered if it acquires UK land on or after 6 October 2020 (or if it holds UK land and the trustees are changed after that date). This does not apply if the property is acquired via a holding company or nominee (albeit in the latter case, the nominee arrangement must be registered).

Registration requirements

If a JPUT is required to be registered the relevant information (which HMRC sets out in its guidance at TRSM32000) will need to be compiled and submitted via HMRC's online system.  This will include contact details for each trustee and unit holder.

The rules also require particular records to be maintained (for further detail see the HMRC guidance) and proof of registration to be provided on engaging regulated services (such as lawyers, accountants and banks). The registered details are required to be updated annually where UK tax is payable, and otherwise within 90 days of any changes to the registered details.

Osborne Clarke comment

HMRC's change of position in relation to the registration of unauthorised unit trusts will mean that many more JPUTs will be required to be registered on HMRC's trust register. It is also likely that many trustees and advisers will have missed the deadline for registering JPUTs which have acquired UK land since 6 October 2020 (as the deadline for registration of a non-taxable trust is, broadly, the later of 1 September 2022 or within 90 days of becoming registrable). 

Although HMRC is currently adopting a light-touch approach to penalties, and say that it will impose penalties only where the failure to register is deemed to have been deliberate, it is hoped that HMRC will take into account the recent change in its guidance on the circumstances in which unauthorised unit trusts are required to be registered. However, this should not be relied upon and trustees of unit trusts and their advisers should urgently check whether they have any trusts which should now be registered. 

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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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