The UK government has published a consultation on the introduction of a beneficial ownership register for trusts administered in the UK and non-resident trusts with a UK source income. The plans form part of the UK government’s implementation of the 4th Money Laundering Directive (4MLD) which the government intends to implement notwithstanding the outcome of the EU referendum. The proposals will come into effect from 26 June 2017.
Under the proposals, trustees will:
- be required to obtain and hold adequate, current and up-to-date information on the trust’s beneficial ownership;
- have to provide the trust’s beneficial ownership information to HMRC when the trust “generates tax consequences”. It is likely that this will mean that beneficial ownership information will have to be submitted alongside a tax return; and
- have to grant timely access to the beneficial ownership information they hold to HMRC and the Financial Investigation Unit housed in the National Crime Agency.
Beneficial ownership information for these purposes includes the identities of:
- the settlor
- the trustee(s)
- the protector (if any)
- the beneficiaries or class of beneficiaries
- any other natural person exercising effective control over the trust.
Whilst most of this information will already be known to trustees, further guidance will be required on how the final, catch-all, category is to be interpreted.
Osborne Clarke comment
A beneficial ownership register for trusts had been expected, given the requirements of the 4MLD. A surprise element is the Government’s decision to apply the rules to both trusts administered in the UK and all non-resident trusts with UK source income. But trustees and others in this sector will be pleased to learn that the UK government does not appear to be planning to extend the “people with significant control” register regime – the beneficial ownership register regime which applies to UK companies and limited liability partnerships – to trusts.
Crucially, the UK government has recognised the importance of protecting the confidentiality of taxpayer information and as a result, trust beneficial ownership information will not be made public or shared with private entities or individuals. We will however continue tracking proposals at EU level to provide public access to beneficial ownership information in respect of trusts that “engage in economic activities with a view to gain profit”.