TRSM32100 - Registration: contents: information required: contents: mental capacity
As set out at TRSM60040, information held on the Trust Registration Service (TRS) regarding beneficial owners cannot be shared with third parties if that beneficial owner lacks mental capacity.
To enable HMRC to determine whether this is the case, trustees (or agents acting on behalf of the trustees) are asked to record on TRS whether a beneficial owner does or does not have mental capacity.
This information is used to consider whether an exemption should apply if a third party requests access to the data held in relation to that trust. Information on mental capacity is not used for any other purpose and does not form part of the information that may be shared with third parties.
There is no obligation to record mental capacity status on TRS, however HMRC will assume that an individual does have mental capacity for data sharing purposes unless a lack of mental capacity has been recorded on TRS.
For information on third party data sharing generally, see TRSM60000.
When does someone lack mental capacity?
Having mental capacity means that an individual is able to make decisions about matters that affect them. Individuals should always be assumed to have mental capacity unless there is good reason to think otherwise.
In general, in relation to a trust an individual does not have mental capacity if they cannot understand, retain, use or weigh information to make decisions about their role in the trust because of an impairment or disturbance in the functioning of their mind, such as they have a mental illness, learning disability, dementia, acquired brain injury, or they cannot communicate.
Recording lack of mental capacity on TRS
Trustees are asked to record on TRS when an individual associated with the trust lacks mental capacity in respect of their role in the trust at the time that the information is recorded or updated on TRS.
It is not expected that trustees or agents take steps to arrange a formal assessment of mental capacity. Instead, an individual should be recorded as lacking mental capacity only when there is a reasonable belief that they lack mental capacity in relation to their involvement in the trust.
Where an individual is known to the trustee and it is clear that no mental capacity issues are present, that individual should be recorded as having mental capacity.
If the trustee does not know whether the individual has mental capacity, or does not wish to record this information on TRS, trustees are able to answer ‘I don’t know’ to this question.
If trustees become aware of a change in an individual’s mental capacity status, then TRS can be updated to reflect that change.
Factors to consider when determining whether an individual lacks mental capacity
Factors to consider in determining whether an individual lacks mental capacity may include:
- the use of a Lasting Power of Attorney in England & Wales, Continuing Power of Attorney in Scotland or Enduring Power of Attorney in Northern Ireland relation to an individual, where the attorney has informed the trustees that the maker of the power lacks mental capacity. These Powers of Attorney may be drafted to allow the attorney to make decisions when the beneficial owner has mental capacity, so it is important not to automatically assume that the maker of the power lacks mental capacity.
- The use of an Enduring Power of Attorney which has been registered as the attorney reasonably believes the maker of the power has lost mental capacity or is losing mental capacity to manage their own property and finances.
- Where a close family member of the individual has stated to the trustees that the person is unable to make decisions relating to their role in the trust and has explained the basis for this statement.
If trustees do not have any pre-existing reason to believe that an individual lacks mental capacity, the information recorded on TRS should be completed on the assumption that that individual does have mental capacity.
Further information on the meaning of mental capacity
An individual lacks mental capacity when any of the following applies:
- The individual lacks capacity within the meaning of section 2 of the Mental Capacity Act 2005
- The individual is incapable within the meaning of section 1 of the Adults with Incapacity (Scotland) Act 2000, or
- The individual is incapable by reason of mental disorder within the meaning of Article 3(1) of the Mental Health (Northern Ireland) Order 1986.
More information on the circumstances where these definitions apply can be found on the devolved government websites.
For England and Wales:
https://www.gov.uk/government/collections/mental-capacity-act-making-decisions
For Scotland:
For Northern Ireland:
https://www.health-ni.gov.uk/mental-capacity-act-faqs
Mental capacity and settlors
Note that this question asks for the status of the settlor at time of registration, not settlement. Individuals must ordinarily have legal capacity in order to settle a trust, but the circumstances of that individual may change once the trust has been settled. As the intention of collecting the information is to help determine whether information from the register would be made available on request.
This question is not asked if the settlor is deceased at time of registration.
Mental capacity and trustees
As trustees have to be able to carry out certain functions to fulfil their role, it is unlikely that an active trustee in the trust would lack mental capacity. In most cases a trustee who lacks mental capacity would cease taking any active role in administering the trust.
If the other trustees wish to record that a trustee lacked mental capacity before he or she was removed from the trusteeship, this fact can be recorded on TRS before the trustee is removed from the record.