In recent years, there has been an increase in measures introduced by the Government to tackle tax evasion. Many of these measures have been focused on non-residents and overseas (offshore) investments. In an attempt for greater transparency, the UK Government exchanges data with many other countries about investment and bank accounts held by individuals in different jurisdictions. This information is shared with HM Revenue and Customs under two main schemes. The first one is the Common Reporting Standard (CRS) which relates to accounts held in OECD countries (this is an ever-increasing list of countries throughout the World). The second is the Foreign Account Tax Compliance Act (FATCA) which relates to accounts held in the United States of America.
In 2025, the Government made changes to the Automatic Exchange of Information (AEOI) regulations. These changes affect some trusts and other entities with significant investment income, such as family investment companies. For trusts and other entities that are caught by the rule changes, there was a requirement to register with HM Revenue and Customs by 31 December 2025.
The awareness of this new requirement was very low, with most investment managers and the accountancy bodies only identifying the requirement in late December 2025, which was too close to the registration deadline for most trusts or other entities to consider the requirement to register and act where necessary. This means that the vast majority of trusts and entities captured by the new rules have not yet registered. This is important to note as there are potential penalties for failure to register. However, HM Revenue and Customs have said that late registration penalties will not apply if there is a reasonable excuse for any delay in registering, suggesting that they will be lenient. In order to prevent penalties arising, it is important that you act now to register the trust and other entities if required.
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