Additional registration requirements for Charitable Trusts subject to change

Traditionally only trusts which trigger, or will trigger, a payment of tax have to be registered with the Government’s Trust Registration Service.

Traditionally only trusts which trigger, or will trigger, a payment of tax have to be registered with the Government’s Trust Registration Service (TRS). However, as a result of the Fifth Money Laundering Directive, a change may be in the pipeline for Charitable Trusts.

The Fifth Money Laundering Directive has the potential to make it a formal requirement for all Charitable Trusts to register with the TRS regardless of their capital or income value. This will cause a significant increase in the amount of administration involved in thousands of charitable trusts up and down the United Kingdom.

The TRS rules include a number of data requirements including:

  • who the settlor was/is;
  • who the trustees are and were;
  • whether there is a protector in place;
  • who the potential beneficiaries are; and
  • details of any person ‘exercising effective control of the trust’.

When registering a Charitable Trust with the TRS you also have to register the Trust with the Charities Commission, which has its own annual reporting requirements. Going forward, this requirement to ‘dual register’ is likely to cause an onerous burden of regulatory requirements for smaller Charitable Trusts, which may not have the administrative support or resources of larger charities.

As it stands, the Fifth Money Laundering Directive allows no exclusions for smaller charities. However, it is hoped that the Treasury will review the proposed legislation and the voices of those who have expressed concerns over this will be heard. It is our hope that exclusions will be included before the law comes into force in January 2020.

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