After considerable lobbying by BLP and others the UK Revenue (HMRC) has revised its guidance on which members of a class of beneficiaries must be recorded on the UK trust register.

UK trusts and non-UK trusts which are subject to UK tax have to keep a register of beneficial owners and provide this information to HMRC under rules which came into force on 26 June 2017.

HMRC released guidance (in the form of FAQs) on the UK trust register on 9 October 2017 expressing the view that, where a trust included a class of beneficiaries, any member of that class who could be individually identified by the trustees should be recorded on the trust’s register of beneficial owners (even if they had not received a benefit from the trust).

HMRC has now revised its guidance. HMRC confirmed on 23 November that it now accepts that where there is a class of beneficiaries individual members of that class (who are not named in the trust or a letter of wishes) only need to be recorded on the trust register once they have received a financial or non-financial benefit from the trust.

In light of HMRC’s revised view trustees must record information on the following ‘beneficial owners’:

  • settlor (even if the settlor is dead)
  • trustees
  • beneficiaries named in the trust or a document from the settlor (unless they are only contingent beneficiaries and the contingency has not yet occurred)
  • where there is a class of beneficiaries, any individual within the class that has received a benefit (since 26 June 2017)
  • any named contingent beneficiary where the relevant contingency has happened
  • any individual who has ‘control’ over the trust.

Example 1:

The trust deed includes the following definition:

Beneficiaries means: (i) Abigail Jones; (ii) Tom Smith; and (iii) their children and grandchildren

Abigail Jones and Tom Smith should be included on the register, because they are named.

The children and grandchildren of Abigail Jones and Tom Smith should be recorded as a class. If a particular child or grandchild receives a (financial or non-financial) benefit, that child/grandchild then has to be included on the register. The fact that some of the children/grandchildren are alive and known to the trustees does not change the position.

Example 2:

The trust deed states that the beneficiaries are the grandchildren of the settlor (some of whom are alive and known to the trustees) and the settlor's niece, Mary. The settlor’s letter of wishes states that if Mary dies the settlor’s nephew, John, should be added as a beneficiary.

The trustees should record the grandchildren as a class, although if a grandchild receives a benefit then at that point the trustees should record the identity details of that particular grandchild on the register.

Mary should be recorded on the trust register as she is a named beneficiary.

John should be identified as a class of beneficiary.

Example 3:

The trust deed states that the beneficiaries are the children of the settlor (some of whom are alive and known to the trustees). The trustees have a letter of wishes from the settlor which states that if all his children die before the trust comes to an end the trustees should benefit his grandchildren, Bill and Sarah.

The trustees should record the children as a class. When a child receives a benefit then at that point the trustees should record the identity details of that particular child on the register.

Bill and Sarah should be identified as a class of beneficiaries while any of the settlor’s children are alive. If all the settlor’s children have died the trustees should record the identity details of Bill and Sarah on the register.