HMRC’s Trust Registration Service (TRS) is an online register of the beneficial ownership of assets held in trusts. Since the 6th October 2020, all expressly created UK trusts have an obligation to register for the TRS.
Tim Walford-Fitzgerald, Private Client Partner explains “The TRS was first launched in July 2017 to increase the transparency of trusts, and to reduce the risk of money laundering and terrorist financing. The service has since expanded to include all UK express trusts rather than those just paying tax. Unfortunately, many sports clubs aren’t aware of this change and haven’t yet registered themselves as a trust with HMRC – this can be a very expensive mistake to make.”
Why do sports clubs need to register for TRS?
A trust, at its simplest, is a situation where assets are being held by one person (the trustee) for the benefit of others. There could be more than one trustee.
It is not unusual for clubs to have constitutions that create a trust over the assets of that club. For example: “The committee shall hold and administer, for the general benefit of the club, all funds, property and equipment in the general ownership of the club.”
Even without using the word “trust”, this creates an express trust over the club’s assets, creating an obligation to register the trust and keep the records updated.
Some sports clubs have registered as charities in their own right but many sporting governing bodies are not charities, so being part of a parent organisation will not normally provide protection.
Does this only apply to sports clubs?
This obligation is not limited to sports clubs. AmDram Societies, camera clubs, and masonic lodges are all potentially caught. Even the local bridge club will need to play its cards right if it holds any assets for its members.
What is the penalty if you don’t register?
If you fail to register your club as a trust within the 90 day deadline, or if you don’t keep the details up to date, you could face a fixed penalty of £5000.
Tim adds: “Some governing bodies have published guidance for its members but others have not provided any advice, possibly still reviewing the scope in light of their own rules. Whether HMRC genuinely expects to receive the thousands of registrations and annual updates that are strictly needed is not known, nor is it clear what benefit they will gain from knowing that the local knitting circle has changed its treasurer. That being said, it’s important for clubs to keep HMRC up to date to avoid unnecessary fines.”
If you would like to discuss specific circumstances, please get in touch with Tim Walford-Fitzgerald.