8 March 2018

Money Laundering Regulations – compliance and deadlines for registration (where applicable)

Money Laundering Regulations^¹ – compliance and deadlines for registration (where applicable)

New money laundering regulations came into force last year which contain a number of requirements which apply to, amongst others, the trustees of 'UK relevant trusts' which would include UK occupational pension schemes set up under trust. Some of these relate to record keeping and notification requirements when the trustees contract with certain parties. The record keeping aspects should not, on the whole, be unfamiliar to trustees who are required to keep proper records to administer the trust in any event.

However, more immediately, if such trustees are liable to certain 'Relevant UK Taxes' in relation to the scheme then they are required to register and provide prescribed information about the scheme and its beneficial owners to HMRC. The 'Relevant UK Taxes' in question are income tax, capital gains tax, inheritance tax, stamp duty land tax, stamp duty reserve tax and Scottish land and buildings transactions tax. HMRC has said that registered pension schemes will not need to register if they become liable to income tax solely because of various instances that commonly apply to registered pension schemes e.g. certain charges arising in relation to the Finance Act 2004, or the liability to pay tax under PAYE in relation to members' pension benefits in payment. It is therefore unlikely that the Relevant UK Taxes will arise frequently in relation to the trustees of such schemes. However, where trustees hold certain types of asset there is a greater likelihood that one of these could arise e.g. with direct holdings in land, it is more likely that the trustees will be subject to stamp duty land tax depending on what transactions are carried out in relation to that land.

There are deadlines for registering and providing the information referred to above, which will usually be by 31 January^² following the end of the tax year in which the scheme incurred the liability to the particular tax. However, for the first year of operation of these provisions, HMRC said that if the trustees:

were not registered for self assessment and incurred a liability to income tax or capital gains tax in the 2016/17 tax year for the first time, they had to register and supply the relevant information by 5 January 2018;
were registered for self assessment and became liable to at least one of the Relevant UK Taxes in the 2016/17 tax year then the information had to be provided effectively by 5 March 2018 before the risk of penalties being imposed would arise. This deadline also applies if the scheme is not registered for self assessment and incurred a liability to one of the Relevant UK Taxes other than income tax or capital gains tax in that tax year.

Criminal and civil penalties can apply in relation to non compliance with these requirements. However, the law states that trustees who have taken all reasonable steps and exercised all due diligence to avoid non compliance will not be guilty of an offence. We would recommend trustees to confirm with their investment advisers whether or not they were subject to any of the specified taxes in the 2016/17 tax year which would trigger a requirement to register and to complete any registration as soon as possible if required. If you would like any further information regarding these requirements do let us know.

¹ The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.

² 5 October for schemes incurring income tax or capital gains tax and having to register for self assessment for the first time.