HMRC and HM Treasury have confirmed that charitable trusts regulated in the UK will not be required to register with HMRC under changes to the Trust Registration Service (TRS).
Under the government’s proposed regulations, all charitable trusts in England and Wales that are registered with the Charity Commission, or excepted or exempt from registration, are excluded from the requirement to register with the TRS. This takes trusts with an annual income below the £5,000 registration threshold, among others, out of the scope of registration.
We welcome this outcome which addresses many of the concerns which we raised in response to the government’s consultation on the transposition of the Fifth Money Laundering Directive and, in particular, the initial proposal for all charitable trusts to register with the TRS.
As the risk of UK charities being used as vehicles for money laundering and terrorist financing is low, requiring them to comply with a new layer of transparency regulation to combat those specific issues would have been unduly burdensome.
There are a number of issues which are not addressed in the government’s response and the draft regulations. There is no exemption in the regulations for charities in Northern Ireland which are on the ‘deemed list’ and so not yet registered, and it is unclear how restricted and permanent endowment funds held on trust (including by incorporated charities) will be affected by the new regulations.
The government is due to publish guidance with further details of the parameters of these exemptions which we hope will address these outstanding issues.