Orbiting compliance: a new space for tax reporting

In this briefing, we examine what trustees must get right before tax authorities come knocking.

If a trust distributes income or capital to an overseas beneficiary (also known as non-UK resident beneficiaries), FATCA and CRS may come into play. Think of them as two different satellites in the compliance universe:

• FATCA – zooms in solely on US person.
• CRS – casts a much wider net, covering individuals worldwide. 

Both regimes require annual reporting, with returns due by 31 May following the end of the tax year. 

From 2026, in-scope trusts will need to collect and report further detail, including: account types, how due diligence was carried out, and the self-certification status of account holders.

Missed the launch window? Failure to submit reports can result in penalties. In practice, HMRC typically applies a “soft landing” approach initially, issuing a warning before imposing more significant penalties for repeated non-compliance. 

Building on the above, any trust classified as a financial institution or a trustee-documented trust under FATCA or CRS must complete a one-off registration with HMRC, even if no distributions have been made. Key dates to remember:

• The first registrations were required by 31 December 2025, and;
• Going forward, trusts must register by 31 January following the calendar year in which they first come in scope. 

Late registration can trigger an initial £1,000 penalty, with further penalties of up to £300 per day if the failure continues after the first notice.

In short, even if nothing has yet “left the spaceship”, registration is still required and missing the deadline can quickly become costly. 

Any trust with a French connection, whether through its assets, a trustee, a beneficiary or otherwise, is subject to mandatory reporting in France. Once in scope, the trust must report: 

• When it first comes into scope, 
• Its value as at 1 January each year, 
• Any modification to the trust. 

While modification is not clearly defined in the legislation, it can include changes as minor as a change of address is this requirement should be interpreted broadly.

All reports must be submitted within 30 days of the relevant event. 

Failure to comply can result in penalties of up to €20,000, making early identification and ongoing monitoring essential. 

Trusts with non‑UK connections must ensure they are fully compliant with FATCA, CRS and AEOI obligations. Miss the launch window and penalties can escalate rapidly, which can mean fines of up to £1,000 for failure to register, up to £5,000 for late or missing returns, and daily penalties of up to £600 for ongoing non‑compliance. Trustees should act now to secure a safe lift‑off and avoid a costly crash landing with tax authorities across the globe.