HMRC guidance on unauthorised unit trusts

On the 31 January 2023, HMRC changed its guidance on whether unauthorised unit trusts (UUTs) needed to register on the UK Trust Registration Service (TRS).

In essence, non-UK UUTs (which include Property Unit Trusts based in Jersey and Guernsey, known as JPUTs and GPUTs respectively) must now register on the TRS if they:

• have acquired an interest in UK land on/ after the 6 October 2020; and if they 
• have incurred a UK tax liability from 6 April 2016 onwards.

Some UUTs are structured so that they are not liable to UK tax on UK rental income or on gains realised on disposals of UK real estate (their investors are then usually taxable on this instead). 
 
However, all UUTs are subject to Stamp Duty Land Tax (SDLT) or the Welsh and Scottish equivalents when acquiring UK land. 
 
Those who administer UUTs should check whether any of them have had a TRS ‘trigger event’ and have not been registered with the TRS. In addition, after the initial registration, any changes should be updated on the TRS within 90 days and where a UUT has incurred a tax liability, an annual declaration on the TRS register is required.
 
This change may affect a UUT that was in existence on or after 6 October 2020 even if it has since been wound-up. If a TRS trigger event has occurred, the UUT must still be registered on the TRS. 
 
While a TRS registration deadline may have been missed if the trigger event was some time ago, HMRC will currently only charge a penalty (which can be up to £5,000) if they decide there has been deliberate failure to register a trust or to update its details on the TRS within a timescale set by HMRC.