UK Toughens Requirements for Trusts
The United Kingdom of Great Britain and Northern Ireland has introduced new requirements for registration and reporting regarding the trust management mechanisms both within the state and outside it. The introductions stipulate that British and non-British trustees are obliged to register all corresponding to these requirements trusts in the new service (register) on disclosing information on Trust Reporting Service by March 5, 2018, in accordance with these requirements. Otherwise, there is a threat of imposing fines.
The scope of application of the rules is quite wide. Thus, all the so-called “express trusts” (trusts established according to the intentions of the parties and recorded verbally or in writing, in contrast with the trust by court order) created anywhere in the world that have undertaken the corresponding tax liabilities under the UK law within the tax period (April 6 - April 5) and meet a number of other conditions, are demanded to register and report the information about the trust, its founders, beneficiaries and assets. These data will be kept in the registry of the UK government, which is available to law enforcement and tax authorities. The following taxes and fees are included in the tax liabilities accepted by the trusts:
- income tax;
- capital gains tax;
- inheritance tax;
- postage tax;
- land tax and construction;
- stamp duty on transactions with non-documentary securities.
Trustees may be liable to pay one or more of the above taxes if the trust has acquired or retained certain types of British assets - including shares and other British securities, UK debt instruments, as well as real estate and land in its territory.
The information to be entered in the Trust Reporting Service is relatively extensive.
Thus, regarding the intermediaries and beneficiaries, the trustees must provide detailed identification information, some kinds of which are not disclosed to date. It includes full name, date of birth, social security number, or unique tax identification number, or permanent residence address. If any of the reporting entities is a legal entity, then the registration information, tax residence and address of the registered office should be provided.
The trustees of business trusts with a large number of beneficial owners (such as pension programs for employees, charitable trusts and trusts for employees) will be suggested to determine the beneficiary class if the number of the indicated persons exceeds 10.
This requirement was introduced in response to the 4th EU Money Laundering Directive and in accordance with reporting requirements, operating both in the territory of the European Union (especially of France and Italy) and outside (for example, in Israel and South Africa ). Therefore, the above introductions should be considered in the global context of registration and reporting requirements for certain trusts and trustees in the territory of different jurisdictions.