Charitable trusts not required to register with Trust Registration Service

28 January, 2020

 

The government is proposing that charitable trusts should be exempt from registering with the Trusts Registration Service.

The announcement was made in a technical consultation on the Fifth EU Anti-Money Laundering Directive (5AMLD) on the 24 January.

The original consultation indicated that charitable trusts were likely to fall within the definition of an express trust and therefore would have to register.

This caused concern amongst the charity sector as it meant that most charities would need to register with the Trust Registration Service – this had been poorly publicised and would create additional red tape.

5AMLD was written into UK law on the 10 January 2020 but made no reference to the Trust Registration Regime.

Now, the Government has now proposed that “charitable trusts are not in scope to register because the risk of these kinds of trusts being used for money laundering or terrorist financing activity is low”.

John Hemming, Charity Tax Group Chairman, commented:

“This is a great outcome for charities and vindicates the responses made by CTG and other sector bodies to the original consultation that charities were low risk and should be excluded from registering with the Trust Registration Service.

“This is a great example of common sense prevailing particularly as the rules would otherwise have applied regardless of whether or not the trust has incurred a UK tax consequence. We are aware that very small charitable trusts, including those that are excepted from registration with the charity regulators, could have been caught, which would have been unduly onerous, given their limited resources”.

5AMLD is a series of amendments to the 4AMLD, which was passed in 2017. The original legislation put in place wide-ranging requirements on businesses to help combat money laundering and corruption. These included introducing a risk-based approach and removing automatic exemptions from due diligence. 5AMLD makes these due diligence requirements more onerous and extends them to cryptocurrencies.

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