Occupational Pensions: HMRC guidance on trust registration service
Author: Suzanne Burrell and Kunjan Sembhi
Applies to: UK wide
The Money Laundering Terrorist Financing and Transfer of Funds (Information on the Payers) Regulations 2017 (2017/692): Occupational Pension Schemes and HMRC's Trust Register
The Money Laundering Terrorist Financing and Transfer of Funds (Information on the Payers) Regulations 2017 (2017/692) came into force on 26 June 2017. The Regulations require the Trustees of an express trust that incurs relevant tax liabilities to register the trust with HMRC. This raises questions on whether an occupational pension scheme is an express trust within the legislation and must therefore submit details to HMRC's online trust registration service. HMRC has now published guidance on registration including a section providing guidance to occupational pension schemes.
HMRC online trust register
The obligation to register via the online registration service applies to an occupational pension scheme to the extent that the pension scheme pays 'relevant UK tax'. Relevant UK tax comprises: Income Tax, Capital Gains Tax, Inheritance Tax, Stamp Duty Land Tax, Stamp Duty Reserve Tax, Land and Buildings Transfer Tax (Scotland).
HMRC's guidance confirms that relevant UK tax will not include situations where the Scheme Administrator/ Trustees has to pay UK income tax because of the following situations:
- Where the Trustees are severally liable with the Member for lifetime allowance charges;
- Where the Scheme pays the Member's annual allowance charge (Scheme pays);
- Where the Scheme is liable to certain charges under the Finance Act 2004 such as an unauthorised payment charge.
Therefore if the pension scheme is not subject to relevant UK tax in any particular tax year, then there is no need to register. HMRC, in its guidance, says that it expects most registered Pension Schemes to be express trusts but not taxable relevant trusts.
Legislation also sets out additional record keeping requirements which apply even if there is no requirement to register on HMRC's trust register. Accurate and up to date written records of all beneficial owners must be maintained by trustees. Given that trustees are required to maintain information as part of their general obligation as trustees of occupational pension schemes, this should not represent a significant additional burden on trustees.
Beneficial owners of a pension trust are usually the sponsoring employer, the trustees and the members of the pension scheme. In the case of members, it is recognised that it may not be possible to identify all individual beneficial owners and where there is a class of beneficiaries, HMRC confirms that it is acceptable to provide a description of the class of persons who are beneficiaries or potential beneficiaries of the trust.
In relation to the scheme sponsor, it is common for this to have changed over time. Any obligation to provide details of the trust settlor should include the original employer who established the Scheme. If the original employer is no longer involved in the Scheme, then the current participating employers should be listed. This obligation only arises if there is a requirement to register on HMRC's Trust Register.
In terms of next steps, these should be limited. However, trustees should be aware of the new requirements in case they become subject to relevant UK tax and therefore trigger the requirements.
This document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.