NEW LEGISLATION FROM HMRC – DEADLINE 1ST SEPTEMBER 2022

You may have already been contacted by your solicitor. However, as your accountant, we wanted to ensure that you are aware of the new legislation from HMRC.

Please kindly take the time to read this article, as the recent changes to legislation may affect you, even though it may not be obvious.

The new legislation may affect you if:

• Your practice owns a property and you are a property owning partner (This is not relevant to sole practitioners – only partnerships)
• Your practice holds shares in a limited company – such as your federation, a provider service or PCN
• Your practice is the lead practice of the PCN and receives PCN money from the NHS

If you fall into any of the above categories, you must read on.

Changes to the legislation in respect of Trusts

In 2017, HMRC introduced a new Trust Registration Service. This required all taxable Trusts to formerly register with HMRC. However, this was not required for those Trusts which did not pay tax.

On 6 October 2020, new rules were introduced to the service. The objective was to ensure that the UK’s anti-money laundering and counter terrorism regime was current, proportionate and transparent. This extended the scope of the register to all UK and some non-UK Trusts, whether or not the Trust has to pay any tax, but with some exclusions.

HMRC are still clarifying some of their guidance and until now it has been very unclear as to who will be affected by these changes.

By 1^st September 2022, all express trusts (a trust created deliberately by a settlor, usually (but not always) in the form of a document such as a written deed or declaration of trust) in existence at 6^th October 2020 should be registered on the Trust Register via the Trust Registration Service, unless they are specifically excluded.

We are aware that penalties may be incurred if this deadline is not met, or if the information on the register is not kept up to date. However, HMRC will only penalise deliberate failures following repeated warnings or providing details that are deliberately inaccurate.

Why the legislation will affect you

1. Your practice owns a property and you are a property owning partner

Property owners listed at the Land Registry can potentially be holding the property in trust for other property owners who are not listed at the Land Registry. Therefore, this type of “Trust” is caught by this legislation and will be required to register.

There are exemptions for this which are:

• If all the owners of the property are shown on the Land Registry entry, then no action is required
• If four current property owners (as this is the maximum number of entries on the Land Registry) are shown on the Land Registry entry, but there are more beneficial owners, then no action is required

If you are unsure of what the Land Registry entry is for the property, please contact your solicitors who will be able to confirm this to you.

2. Your practice holds shares in a limited company – such as your federation, a provider service or PCN

Shares can only be held by an individual and often shares belonging to a partnership are in the name of one partner who holds those shares in trust for the other partners. Therefore, this type of “Trust” is caught by this legislation and will be required to register

3. Your practice is the lead practice of the PCN and receives PCN money from the NHS

As the lead practice of your PCN, you receive money from the NHS on behalf of your member practices. While this money remains within a practice bank account, you hold this money in trust for the other member practices. Therefore, this type of “Trust” is caught by this legislation and will be required to register. However, your PCN network agreement may indicate that you are not holding the funds in trust, in which case there is no further action required

Action Required

If registration is required, or you are unsure if you should register, you may wish to contact the solicitor who dealt with your property purchase, or helped set up your limited company or PCN. They will be able to action this for you or advise you.

Alternatively, you can register your Trust online yourself with HMRC, following the below link:

https://www.gov.uk/guidance/register-a-trust-as-a-trustee