What happens if your Asset Protection Trust hasn’t been registered?

Written by Amy Douch | Wills, Trusts, Tax and Probate Team | 10 July 2024

Asset Protection Trusts (APTs) are used for managing and protecting assets, which means it’s critical that it has been properly registered. Many APTs are legally required to register with HMRC both for reporting for tax purposes, and being entered on HMRC’s trust registration service (‘TRS’).

This is essential to avoiding both legal and financial complications. Your APT should still have been registered, even if you intend to end the Trust.

There are other reasons why it’s important to ensure your APT has been properly registered:

Tax Implications

Failure to register your APT can lead to significant tax issues. Without proper registration, the trust may not be eligible for certain tax considerations, which may result in unexpected tax liabilities. Failure to report on taxable incomes or gains can lead to penalties and/or interest for late filing and payment. Proper registration and timely tax payment ensures that your trust is recognised for tax purposes, which can help in managing any associated tax obligations effectively.

Potential fines for TRS

The deadline for registering trusts with HMRC’s TRS was 1st September 2022, or within 90 days of creation for all trusts created after that date which are required to register. You may have to pay a fine of £5,000 if you fail to register a trust, or if you fail to update the trust register. There are complex rules on which trusts need to be registered although many APTs will have been required to register. It is important to take legal advice if you are unsure about whether your trust should have been registered.

Securing Beneficiaries’ Interests

Proper registration is crucial for protecting the interests of your beneficiaries. Registration provides the necessary legal recognition to protect beneficiaries’ interests and ensure that the trust is officially recognised.

What are the steps to ensuring proper registration if you have concerns?

• Consult a Solicitor: it is recommended that you appoint a solicitor with expertise in trusts and estate planning to both advise if your trust has been registered and to guide you through the registration process where necessary

• Prepare Necessary Documentation: your solicitor should be able to review all the trust documents and registration position, and will then advise you on the next steps and action to be taken to bring the trust in line with it’s current tax liabilities and reporting requirements

• Maintain Records: it is important that you keep detailed records of the trust’s registration and any correspondence with authorities to ensure transparency and accountability

It is best that you work with an experienced trusts solicitor to follow each of the steps as this will reduce the risk of error. Your solicitor will know the necessary steps to take to ensure your trust has been properly registered, meaning the experience is more straightforward for you.

Our Wills, Trusts, Tax & Probate team have vast experience in helping clients to review their trusts and implement measures that are both compliant and align with their interests and wishes. If you would like to speak to the team about your personal circumstances, you can get in touch with them by calling 01752 827067 or emailing wills@nash.co.uk.