Trust Registration Service and rural business

Could the new trust registration rules affect your rural affairs?

As anyone involved in the rural world will know, there is plenty of change going on, as the support regime evolves from a land-based system to one where payments are linked to the delivery of public goods. With this getting a lot of coverage, rather less attention is being given to new rules requiring many trusts to be registered with HMRC’s Trust Registration Service (TRS) by 1 September 2022.  These rules were brought in by the government following Brexit in order to implement relevant parts of the EU’s Fifth Money Laundering Directive.

A wide range of different trusts need to be registered with the TRS. Lodders’ agricultural law team highlights some examples for rural businesses including hunts.

Farming partnerships and trusts

Partnerships are, of course, a common vehicle through which farming businesses operate, and it is not unusual for land and assets to be held by some partners in trust for the partners of the business as a whole.

For those farming businesses that do operate through a partnership structure, there may well be an obligation on asset-owning partners to register the trust with the TRS – irrespective of whether there is a written declaration of trust or the “trust” arrangement has arisen without any written document at all.

Hunt trustees

Other less usual arrangements may also be caught. For example, in a hunting context this may well include the trustees of kennels and other property; but the word ‘trust’ need not expressly be used for this to be the case, so where hounds are stated to be owned “on behalf of the country” it too may be an arrangement requiring registration.

Other considerations

Sometimes the existence of a trust will be obvious: for example, there may be a specific trust deed, or a trust may arise expressly under a will.  In those situations, trustees will clearly need to consider if registration with the TRS is required.

Less obvious though, is that in many cases the mere ownership of property on behalf of others is likely to lead to a registration requirement.  There are many other trust situations where an obligation to register will arise in circumstances that may not be obvious.

The duty to register falls on the trustees, who will be liable to pay a fine if registration is not completed by the 1 September 2022 deadline.

More information

Lodders has a dedicated TRS team to help understand the requirements to guide you through the process of registering your trust.  For more information, you can visit our dedicated Trust Registration Service FAQ page here.