Our Appleby team looks at HMRC’s recently updated guidance on Jersey Property Unit Trusts (JPUTs) and what it means for the Trust Registration Service (TRS).
BACKGROUND TO JPUTS
HMRC has recently, on 31 January 2023, updated its published guidance to confirm that Jersey Property Unit Trusts (JPUTs) are within scope of the trust registration service (TRS) and may need to register.
JPUTs are commonly recognised by HRMC as being unauthorised unit trusts (UUTs). HMRC’s previous guidance suggested that UUTs were not required to be registered with the TRS unless the JPUT became liable to certain UK tax obligations. However, this has recently been changed and the guidance specifically contemplates UUTs needing to register if one of the “trigger events” (as summarised below) is applicable to them.
We note that the guidance in relation to authorised unit trusts has not changed and these are only required to be registered if a liability to a relevant UK tax arises.
TRUST REGISTRATION SERVICE
The TRS is a register of the beneficial ownership of certain trusts that was set up in 2017. It requires trustees to register, and disclose certain information regarding the trust, including in relation to:
- the settlor;
- the trustees;
- the beneficiaries; and
- certain other individuals with control over the trust.
TRIGGER EVENTS FOR JPUT REGISTRATION
A JPUT will be required to register on the TRS if it has:
- Directly acquired an interest in UK land on or after 6 October 2020;
- Acquired a partnership interest in a partnership which acquired an interest in UK land on or after 6 October 2020;
- Incurred a tax liability in the UK (including stamp duty land tax or the Scottish and Welsh equivalents) on or after 6 April 2020; or
- Entered into a business relationship with a UK business that is required to carry out customer due diligence checks.
Of the above, the most relevant triggers to JPUTs are likely to be where they have directly acquired an interest in UK land (or a partnership as set out above) or incurred a tax liability.
As noted above, registration is required for historic trigger events since the dates set out above and so the changes to HMRC’s TRS guidance is relevant to existing structures as well as new ones. Registration requirements could even be relevant to JPUTs that have been wound up if any of the above applied to it whilst it was in existence.
REGISTRATION DEADLINES AND PENALTIES
The deadline for registrations depends on when the trust is set up and:
- For taxable trusts, when the tax liability arose; and
- For non-taxable trusts, when the trigger to register arose.
There is also a general obligation to register any changes to information that has been submitted with the TRS within 90 days of the change. Further information regarding the information that needs to be submitted and kept up to date can be found at Manage your trust’s details – GOV.UK (www.gov.uk).
HMRC may charge a fixed penalty of up to £5,000 for failure to register a relevant trust on the TRS or to update a registered trust’s details within 90 days of a change (such penalty being levied against the trustees of the JPUT).
However, its guidance states that it will not charge a penalty for missing a registration deadline or for failing to update the details of a trust provided that (i) the deadline was not deliberately missed and (ii) the registration is corrected within the time limit prescribed by HMRC.
IMPLICATIONS OF TRS REGISTRATION
Trustees of a JPUT should seek advice as soon as possible to understand whether they need to register on the TRS and, if so required, complete such registration in a timely manner to ensure they do not fall foul of HMRC.
Trustees should also be mindful of any contracts which they have entered into which might contain representations that they are in compliance with all laws (such as facility agreements) – as it is likely a registration on the TRS would fall within this.
In addition, buyers of the units in a JPUT should be mindful of these new requirements and carry out due diligence to ensure that the trustees have fulfilled their requirements.
For further information, please contact:
Andrew Weaver, Partner, Appleby