Lowes Trust Registration Guide

Penalties for non-compliance

HMRC acknowledge that many ‘lay’ (non-professional) trustees will be unaware of their obligations and that therefore a proportionate approach is required – Penalties for non compliance therefore aim to reflect this fact, whilst serving as a sufficient deterrent.

The penalty regime for trusts required to register under 5MLD is: • Failure to register - For the offence of failure to register there is no financial penalty, but a notification (‘nudge’ letter) would be sent to the trustee setting out their responsibilities. It should be noted, however, that this would only be the case if this was a genuine mistake and where a trustee is found to have failed to register on time deliberately, they would receive a financial penalty rather than a notification. • Failure to update details - For a first offence the trustee would receive a notification, but for a second or subsequent failure a penalty of £100 would be levied for each offence. Where there are deliberate offences, however, the trustee is likely to receive a financial penalty rather than a notification.

Note: The TRS currently has penalties based on the self-assessment penalty regime for failure to register taxable trusts on time. The fixed penalties for an administrative offence are: • Registration made up to three months after the due date: £100 penalty. • Registration made three to six months after the due date: £200 penalty. • Registration more than six months late: either 5% of the total tax liability or £300 penalty, whichever is the greater.

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