Page 10 - ALG Issue 3 2024

LEGAL
TRUSTEE
REGISTRATION SERVICE
As many of you reading this will already be aware, the NAS recently published advice regarding the Trustee Registration Service (TRS).This article will reinforce what the TRS is, who needs to apply, and also cover some of the frequently asked questions that we have received.
What is the TRS?
The TRS is a system managed by HMRC for registering trusts as required under money laundering legislation. For context, here is some information on the legislation and the TRS:
New rules were introduced on 6 October 2020, as part of the UK’s implementation of the Fifth Money Laundering Directive.There has been a delay in the rollout of HMRC’s upgrade of the TRS register. Now
the Money Laundering and Terrorist Financing (Amendment) Regulations 2022 have extended the scope of the TRS to cover (almost) all UK express trusts and some non-UK express trusts, in existence on or after 6 October 2020.
To clarify, the intention of the register is merely to show that a trust exists. For the overwhelming majority of our members that are not liable for any taxes based
on the context of their allotments, the registration will have no impact on your
tax liability and will not impact how you operate on your sites.The TRS will only require the basic information of the trust, and a confirmation of who the trustees are.
Who should register?
All unincorporated associations that
have a lease agreement with the council/ landowner and/or have an association bank account that holds money that will be used to benefit the association’s members (e.g. NAS membership fees, improvements and repairs to the site, etc.) will strongly be advised to consider registering with the TRS.
An “unincorporated association” will refer to any groups that have not registered with Companies House, the Financial Conduct Authority or the Charity Commission as a company or charity. Such groups will have no legal identity and therefore cannot enter into any agreements and all members will be jointly and severally liable. In these cases, (2-4) trustees must be appointed to sign
a lease agreement on behalf of the wider membership.
For unincorporated associations that
do not have a lease but do have a bank account, the signatories to the account are effectively acting as trustees as they manage the bank funds on behalf of the plotholders (beneficiaries). As such, these groups
would also be strongly advised to consider registering with the TRS.
For incorporated associations, you do not need to register with the TRS. Instead, you should make sure that you are registered with HMRC for corporation tax. If you are not registered, you can find the registration page on the gov.uk website.You may
need to request the association’s unique taxpayer reference (UTR) to complete
the registration. Once complete, the vast majority of incorporated associations should then be able to confirm that they are not liable for corporation tax and their account will be listed as dormant for 5 years.
Frequently asked questions:
• Who is the settlor?
The settlor is the person or group who is putting the assets into the trust. Using the two common examples mentioned previously, this will be the council/ landowner with regards to a trust that is
based on a lease agreement. In contrast, the settlor would be the plotholders who are paying their rent/membership fees/ etc. with regards to a trust based on the association holding a bank account.
• Who are the beneficiaries?
The register should let you choose
to either designate specific individuals or to set a class of beneficiaries. For associations, the beneficiaries are the members as they are benefiting from the use of the land and/or the money being held in the association’s account. It is advised to state that the beneficiaries of the trust are “the members of the association” as the designated class.This will avoid the need to constantly update the registration with the names of new tenants.
• Should we select express trust or non-express trust?
For anyone going through the registration process and is unsure whether the trust is an express trust or non-express trust, the overwhelming majority of our members using the registration service should
be registering an express trust. Most associations will have trustees sign a lease
10 | Issue 3 2024 | Allotment and Leisure Gardener