Trusts have among many benefits for families holding wealth, the benefit of privacy. Trusts are not public in the way that companies are. Trust do not have to publish accounts or details of their beneficiaries. This can make them attractive vehicles- not just from the outside world, but also from within families- parents may not wish their children to know that there are funds in trust for them.
While the trusts would require to submit inheritance tax (IHT) and income and capital gains tax returns to HMRC, these are private and not shared amongst the family nor the wider world, preserving this privacy.
With increasing compliance obligations on trusts, has this privacy been eroded?
HMRC Trust register service (TRS)
The TRS introduced in 2017 requires trustees to register the trust, the settlors, the trustees and beneficiaries. However, this is not publicly searchable. The gathering of data for this purpose may erode family privacy, due to the interaction with the General Data Protection Regulation (GDPR).
Automatic Exchange of Tax Information (AEOI)
AEOI introduced in 2014 requires trustees to report on persons connected with the trust who have a foreign connection, e.g. the non UK trustee. This is not public information.
Register of Controlled Interest in Land (RCI)
The RCI requires registration where the title at the land register does not match who controls the land, for example where a title is in the name of trustees 1, 2 and 3 but 2 has resigned and 4 been assumed, this engages the RCI. The RCI is publicly searchable. Applications can be made to keep the information private but is limited to very specific circumstances such as danger to that person. Title could be changed instead and is also publicly searchable. This would only tell the family or the wider world that the trust owns the land- it would not tell the story of the beneficiaries. It would also not tell the story of the other assets the trust holds, or the income it generates.
GDPR
To comply with GDPR, the trustees with the reporting obligations cannot ask the beneficiaries for their personal information needed for the compliance. They must be asked directly and be given the privacy notice. This then tells the beneficiary they are a beneficiary eroding privacy within the family. HMRC have confirmed after the TRS was introduced that beneficiaries not named in the trust but named in a letter of wishes have to be added to the TRS. Not naming a beneficiary specifically can maintain privacy among the family. This is where it can get interesting- the interaction between (increasing) compliance and (increasing) GDPR, if one can take the view that GDPR has privacy as an intention but compliance requires information to be gathered and registered in various places which can then become public.
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