Question 1

Money Laundering Regulations

Accepted Answer

Q: I am sure you are aware that the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017) came into effect last year. These regulations require trustees to hold a considerable amount of personal information about settlors of trusts, including dates of birth and national insurance numbers. HMRC require all trusts to register with them, and provide details of all beneficiaries, including the settlors. HMRC consider that these regulations apply to Service Charge Funds, which are held in trust, whenever the service charge fund is required to complete a Trust & Estate Tax Return. I have registered our Residents’ Association’s Service Charge Fund with HMRC, as historically the service charge has received untaxed interest and was required to register with HMRC, and still completes Trust & Estate Tax Returns even though the interest income is now extremely low. I registered this on the basis that the settlors were a general group of people rather than specific individuals, but think this may have been incorrect. If I was incorrect, it seems that I will need to write to all of the leaseholders (as settlors) to obtain their full names, national insurance numbers and dates of birth, and provide this information to HMRC. I am somewhat reluctant to write to the leaseholders, as it will be very complex to explain the reason for requiring this information giving full references to legislation. I am also very sceptical about the level of response, as people are generally and rightly reluctant to provide such information. I know we will need to follow GDPR guidelines as well, and though this is of concern I am sure we can comply with this. Do you know how other Residents’ Associations are dealing with this, and are you able to provide any advice on the best way to deal with this? I have not been able to find any guidance on this. FPRA Hon Consultant Jo-Anne Haulkham replies: We recommend as a starting point that you consult the HMRC website for guidance on the Trust Registration Service in order to understand which trusts need to register and consider how/if this applied to you. It is our understanding that the HMRC TRS Guidance explains which trusts need to register, and this may require you to consider items such as whether you have a “Taxable Consequence”, and an “Express Trust”. In addition, it is our understanding that some blocks have specific written agreements in place with HMRC with regard to their tax affairs. With regard to GDPR, we recommend you refer to the Information Commissioners Office website for guidance. Beyond this, we would recommend you seek formal advice from a firm who specialise in this area. Question submitted March 2018

Question 2

Money Laundering Regulations

Accepted Answer

Q: I am sure you are aware that the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017) came into effect last year. These regulations require trustees to hold a considerable amount of personal information about settlors of trusts, including dates of birth and national insurance numbers. HMRC require all trusts to register with them, and provide details of all beneficiaries, including the settlors. HMRC consider that these regulations apply to Service Charge Funds, which are held in trust, whenever the service charge fund is required to complete a Trust & Estate Tax Return. I have registered our Residents’ Association’s Service Charge Fund with HMRC, as historically the service charge has received untaxed interest and was required to register with HMRC, and still completes Trust & Estate Tax Returns even though the interest income is now extremely low. I registered this on the basis that the settlors were a general group of people rather than specific individuals, but think this may have been incorrect. If I was incorrect, it seems that I will need to write to all of the leaseholders (as settlors) to obtain their full names, national insurance numbers and dates of birth, and provide this information to HMRC. I am somewhat reluctant to write to the leaseholders, as it will be very complex to explain the reason for requiring this information giving full references to legislation. I am also very sceptical about the level of response, as people are generally and rightly reluctant to provide such information. I know we will need to follow GDPR guidelines as well, and though this is of concern I am sure we can comply with this. Do you know how other Residents’ Associations are dealing with this, and are you able to provide any advice on the best way to deal with this? I have not been able to find any guidance on this. FPRA Hon Consultant Jo-Anne Haulkham replies: We recommend as a starting point that you consult the HMRC website for guidance on the Trust Registration Service in order to understand which trusts need to register and consider how/if this applied to you. It is our understanding that the HMRC TRS Guidance explains which trusts need to register, and this may require you to consider items such as whether you have a “Taxable Consequence”, and an “Express Trust”. In addition, it is our understanding that some blocks have specific written agreements in place with HMRC with regard to their tax affairs. With regard to GDPR, we recommend you refer to the Information Commissioners Office website for guidance. Beyond this, we would recommend you seek formal advice from a firm who specialise in this area. Question submitted March 2018

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