A Freedom of Information (FOI) request to HM Revenue & Customs (HMRC) revealed that just 153,241 trusts have been registered since the service began in June 2017.
According to Canada Life, as many as one million registrations are outstanding.
Most express trusts need to be registered with the taxman by 1 September 2022, with responsibility firmly on the shoulders of the trustees to submit through the HMRC portal.
Late registration will result in a penalty, although the regime is still being finalised with initial proposals suggesting trustees could face fines of up to 5% of any tax liability or £300 ($395, €360) whichever is highest, Canada Life said.
In early 2018, there was a surge in registrations, as the original deadline for submissions was that year. Now the life insurer said there has been another uptick with the 1 September deadline approaching.
Stacey Love, tax and estate planning specialist at Canada Life, said: “We’ve had a strong start to the year for successful registrations but given recent estimates that one million registrations may need to be completed, I suspect HMRC will experience a flood of registrations over the coming months.
“This means that almost 170,000 trusts would need to be registered each month to meet the deadline.
“It is to be hoped that HMRC has used its past experience of the spike in registrations in Q1 of 2018 to ensure the current system is ready for the expected surge, but it’s important that advisers encourage their trustee clients who may be impacted to register well ahead of the deadline.”
