The Law Society of England and Wales has asked HMRC to consider deferring the commencement dates of the new Trust Registration Service (TRS) rules based on the EU Fifth Anti-Money Laundering Directive (5AMLD), and to defer the commencement date of EU Directive 2018/822 (DAC6).
Implementation of the 5AMLD will require that the existing TRS include all express trusts, not just those with UK tax consequences. It also brings into scope non-EU-resident trusts that own UK land or property, or that have a business relationship with an entity obliged to carry out customer due-diligence in the UK. This will extend the number of registrable trusts from around 200,000 to as many as two million, depending on the scope of exemptions which has not yet been confirmed by HM Treasury.
HM Treasury’s current plan requires unregistered trusts already in existence on 10 March 2020 to be registered by 31 March 2021. However, according to the Law Society, given the scale of the expansion even this extended deadline will place a significant burden on both private and public sectors, including law firms.
The Law Society is also asking for postponement of the disclosure and reporting rules for intermediaries involved in designing and promoting cross-border tax planning schemes, based on DAC6. These regulations are due to come into force on 1 July 2020.
‘We consider there is a strong case for deferral of both [directives] in current circumstances’, said the Law Society. It says it is aware of similar requests that have been raised in other EU Member States.
In a reply to the Law Society at the end of March, HMRC has said it is ‘carefully considering’ the representations it has received about delaying implementation of these rules given the current coronavirus epidemic.