Free Trust Registration Service Penalty Appeal Letter Template

Trust Registration Service — Penalty Appeal

Appeal Under The Money Laundering Regulations 2017 + HMRC Por 6  ·  23 May 2026

Dear Sir or Madam,

I write in my capacity as Trustee of the The Whitfield Family Trust to appeal against the Trust Registration Service penalty issued by HMRC on 13 May 2026 (penalty reference TRS-PEN-2026-3318-720). The penalty relates to the registration (or update) of the trust on the Trust Registration Service. This appeal is lodged within the 30-day period prescribed for TRS penalty appeals (the prescribed appeal deadline is 12 June 2026). I rely on the reasonable excuse defence as applied to the TRS regime through HMRC PoR 6 and on the HMRC published policy that a first non-deliberate failure should not attract a penalty. The factual basis of the defence is set out below.

Trustee lodging this appeal: Catherine Mary Whitfield
Role: Trustee
Trust name: The Whitfield Family Trust
Trust UTR: 5544332211
Correspondence address for the trustees: 32 Elm Park Gardens, Cheltenham GL52 6AT
Telephone: 07700 900318
Email: c.whitfield@email.co.uk

Date the trust came into existence: 14 June 2008
Settlor: Margaret Joyce Whitfield (deceased)
Type of trust: UK express trust — discretionary trust
TRS classification: non-taxable trust under the post-2020 expanded TRS regime — registration deadline 1 September 2022 (or 90 days from registerable trigger, whichever later)
Applicable registration / update deadline: 1 September 2022
Date registration / update was in fact made: 8 May 2026
Statutory framework: Money Laundering Regulations 2017 (SI 2017/692) as amended by SI 2020/991 (5MLD Amendment Regulations 2020), regulations 45ZA-45ZD

Date of the penalty notice: 13 May 2026
Penalty notice reference: TRS-PEN-2026-3318-720
Amount of penalty: £200
Penalty framework: HMRC Penalty Statement of Practice PoR 6, applying the Money Laundering Regulations 2017 + Finance Act 2009 Schedule 55 by analogy
Appeal deadline: 12 June 2026 (30 days from the date of the penalty notice)

The trustees disagree with the £200 TRS penalty issued in respect of the registration of The Whitfield Family Trust. The trust was created in 2008 as a non-taxable family discretionary trust holding a single residential property occupied rent-free by the settlor's adult daughter. There was no tax liability and the trust had never previously had any direct interface with HMRC. The trustees were not aware that the post-2020 expansion of the Trust Registration Service to non-taxable express trusts applied to the trust until contacted by the family's accountant in April 2026 — the registration was completed within five days of that discovery. HMRC PoR 6 contemplates a warning letter for a first non-deliberate failure; none was issued before the penalty.

The Upper Tribunal in Perrin v HMRC [2018] UKUT 0156 (TCC) settled the four-stage objective test for the reasonable excuse defence under the Schedule 55 framework. The test is applied by analogy to TRS penalty appeals under HMRC PoR 6. The Upper Tribunal in HMRC v Carlton [2017] UKUT 0262 (TCC) held that ignorance of the law is not in itself a reasonable excuse — but where the taxpayer has taken reasonable steps to ascertain the position the position is different. The point is particularly material to the post-2020 non-taxable TRS regime, which expanded the registration obligation to trusts that had previously had no HMRC interface.

Stage 1 — Facts asserted: establish the facts the trustees assert give rise to a reasonable excuse.
Stage 2 — Objective assessment: consider whether, viewed objectively, those facts amount to a reasonable excuse.
Stage 3 — Excuse ceased: identify the date on which the reasonable excuse ceased.
Stage 4 — Remedy without unreasonable delay: decide whether the trustees remedied the failure without unreasonable delay after that time.

Category of excuse relied on: unfamiliarity with the post-2020 non-taxable TRS regime — a category recognised in Carlton v HMRC where reasonable steps were taken to ascertain the position.

Stage 1 — Facts asserted:
The Whitfield Family Trust was settled by deed dated 14 June 2008 by Margaret Joyce Whitfield (deceased 2019) for the benefit of her adult daughter, Eleanor Sarah Whitfield. The trust holds a single residential property (occupied rent-free by Eleanor) and produces no taxable income — no Self Assessment trust return has ever been required. The lay trustees (the settlor's widower and a family friend) had no prior dealings with HMRC in respect of the trust. The post-2020 expansion of the TRS to non-taxable express trusts was not communicated to the trustees by HMRC and the trustees had no professional adviser engaged on the trust at the relevant time. On 12 April 2026 the family's newly instructed accountant, Hartwell Burgess LLP, reviewed the family's affairs as part of an unrelated estate-planning exercise and identified the unregistered trust. The trustees instructed registration immediately, completed the necessary information-gathering exercise (settlor identity, beneficiary class details, trust property valuation, deed) within 21 days and lodged the TRS registration on 8 May 2026. The Carlton authority is in point — the trustees took reasonable steps to ascertain the trust's obligations as soon as a professional adviser identified them.

Stage 3 — Date on which the reasonable excuse ceased: 12 April 2026.

Stage 4 — Remedy without unreasonable delay:
After the registration obligation was identified on 12 April 2026, the trustees instructed registration the same day, gathered the supporting information (settlor identity, beneficiary class details, deed) over the following three weeks and lodged the TRS registration on 8 May 2026. The 26-day elapsed time reflects the practical need to obtain the historic trust deed (held in archive), identify all beneficiaries by full legal name and date of birth, and obtain the trust property valuation. The objective Perrin test is satisfied — a reasonable trustee in the same circumstances could not have remedied the failure any faster.

HMRC PoR 6 (the published Penalty Statement of Practice for the Trust Registration Service) states that a penalty will not normally be charged for a first failure to register, or a first failure to keep the register up to date, where the failure was not deliberate. HMRC's published practice is to issue a warning letter and provide the trustees with an opportunity to register before issuing any penalty. The standard penalty scale where a penalty is charged is £100 for a first non-deliberate failure (often waived), £200 for a second non-deliberate failure, with deliberate failure attracting up to £5,000 per trust. The 5,000-pound ceiling applies only to deliberate failure to the criminal-standard-adjacent civil standard.

Prior TRS compliance history: The trust has had no prior compliance dealings with HMRC. This is the first registration event in the trust's 18-year history.
Deliberate or non-deliberate failure: non-deliberate (the trustees took reasonable steps to ascertain the obligation)

Quantum breakdown and warning-letter analysis:
The penalty under appeal is £200 (the HMRC PoR 6 "second failure" tariff). The trustees say the correct quantum is nil for two reasons: first, this is the first failure (not the second) — no prior penalty has been imposed and no warning letter has previously been issued; second, HMRC PoR 6 explicitly states that no penalty will normally be charged for a first non-deliberate failure where the trustees have responded promptly to a warning letter. No warning letter was issued before the penalty notice. The £5,000 deliberate-failure ceiling is not engaged — HMRC has not asserted deliberate behaviour and on these facts no such case could be sustained.

The TRS registration deadline depends on the trust's classification. A non-taxable trust in existence on or after 6 October 2020 had a fixed registration deadline of 1 September 2022; a trust becoming registerable after that date has 90 days from the registerable trigger; a taxable trust has a deadline tied to 31 January following the tax year in which a tax liability arose; and a change requiring an update has a 90-day window from the change. The trustees say the correct deadline analysis is as follows:

Triggering event date (creation, asset addition, change requiring update): 6 October 2020.

Classification analysis:
The trust is a non-taxable UK express discretionary trust within the scope of the post-2020 TRS regime introduced by SI 2020/991. The registration deadline for non-taxable trusts in existence on 6 October 2020 was 1 September 2022. The trustees concede the deadline was missed; the appeal is brought on the reasonable excuse and quantum-review bases set out above, not on the basis of any classification dispute.

In Beadle v HMRC [2020] EWCA Civ 562 the Court of Appeal confirmed that a penalty notice must comply with the statutory formalities including adequate disclosure of the grounds on which the penalty has been charged. A notice that fails to identify the regulatory paragraph relied on, that fails to set out the date the registration obligation arose, or that fails to provide the trustees with the information they need to mount a defence, is open to challenge. The Upper Tribunal in HMRC v Hok Ltd [2012] UKUT 363 (TCC) confirmed that the First-tier Tribunal has no general fairness jurisdiction — the statutory routes (reasonable excuse and special circumstances) are the routes through which the appeal must run — but the Beadle line of authority on notice formality remains live and is engaged here.

Formality deficiencies in the present penalty notice:
The penalty notice issued on 13 May 2026 does not identify which paragraph of HMRC PoR 6 the penalty has been charged under, does not identify whether the £200 charge is asserted on a first-failure or second-failure basis, and was issued without any prior warning letter despite the explicit policy in PoR 6 that a warning letter should precede penalty for a first non-deliberate failure. On the Beadle authority the notice is open to formality challenge.

If HMRC declines this appeal the trustees rely on the right to request an HMRC internal review of the decision under section 49A of the Taxes Management Act 1970 applied by analogy. The view-of-the-matter letter triggers a fresh 30-day window in which to escalate to the First-tier Tribunal (Tax Chamber) by way of form T240. The Tribunal has jurisdiction to determine the appeal de novo. Where HMRC declines internal review or where the review conclusion remains adverse, form T240 will be lodged with the First-tier Tribunal (Tax Chamber) at PO Box 16972, Birmingham B16 6TZ.

If HMRC declines this appeal the trustees will request an internal review of the decision within 30 days. If the review conclusion remains adverse, form T240 will be lodged with the First-tier Tribunal (Tax Chamber) at PO Box 16972, Birmingham B16 6TZ within the further 30-day window from the view-of-the-matter letter.

The trustees of The Whitfield Family Trust respectfully ask HMRC to cancel the penalty of £200 in respect of the registration of the trust on the Trust Registration Service. The reasonable excuse defence , the HMRC PoR 6 first-failure non-charge rule, the trust-type classification analysis, the Beadle formality challenge (where relied on) and the review-route arguments set out above are relied on individually and cumulatively. Please acknowledge receipt of this appeal and notify the trustees of the outcome in writing as soon as possible.

YOURS FAITHFULLY,