TRS Penalties Announced By HMRC

On 8 December 2017, HMRC announced that while the 31 January 2018 deadline for making a TRS return would remain in place, they would not charge a penalty if trustees, or an agent acting on behalf of the trustee, failed to register their trust on the TRS before 31 January 2018 but no later than 5 March 2018.

Here is the latest announcement from HMRC on the penalties for late filing which we quote verbatim as it is self-explanatory.

“HMRC will not automatically charge penalties for late TRS returns. Instead we will take a pragmatic and risk-based approach to charging penalties, particularly where it is clear that trustees or their agents have made every reasonable effort to meet their obligations under the regulations. We will also take into account that this is the first year in which trustees and agents have had to meet the registration obligations.”

While our information suggests that most TRS returns have been filed, if you have not yet completed your TRS registration(s), you should do so as soon as possible.

When penalties can be issued

Penalties can be charged for administrative offences relating to a relevant requirement.

These are:

• a requirement to register using the TRS by the due date of 31 January after the end of the tax year in which the trustees pay tax on trust assets or income and
• a requirement to notify any change of information by the due date of 31 January after the end of the tax year in which the trustees pay tax on trust assets or income.

The administrative offences penalty

HMRC will charge a fixed penalty to reflect the period of delay:

• Registration made up to three months from the due date – £100 penalty
• Registration made three to six months after the due date – £200 penalty
• Registration more than six months late – either 5% of the tax liability or £300 penalty, whichever is the greater sum.

There is currently no facility to notify HMRC of any change of information online and, as such, we will not charge penalties for a contravention of this requirement until the online function is available.

“A penalty will not be payable if we are satisfied you took reasonable steps to comply with the regulations.”

Given the above statement from HMRC that “a penalty will not be payable if we are satisfied you took reasonable steps to comply with the regulations”, any trustee or agent filing late would be well advised to keep a note of the steps taken to file on time.

ICAEW asked HMRC if an extension would be available due to the inclement weather during the week ended 4 March. Indeed HMRC announced that in relation to its own services, that many of their offices were shut or operating on reduced staffing levels. However HMRC have not (so far) announced any extension.

Source: https://www.techlink.co.uk/