Registration of personal injury trusts with HMRC is not necessary, in most cases. This is certainly the case with a bare trust for personal injury compensation.
Most trusts must be registered with HMRC, to satisfy money laundering regulations. “Trusts arising from personal injury payment” are exempt from registration. Full details and confirmation can be found on the Government website.
Registering a trust with HMRC is not a difficult task, but it is not necessary for most trusts for injury compensation. This exemption makes sense, as we know where the money came from. Criminals use money laundering to make illicit funds appear to have a legitimate origin. We know the origin of personal injury compensation, so very sensibly, registration of such trusts is not required.
Rather like ignoring personal injury compensation in a trust for benefit purposes, avoiding the bureaucracy of HMRC registration makes good sense.
It may be surprising to find personal injury compensation ignored if held in a trust. You are asked to keep the money separate from your personal funds. If receipt of compensation meant you lost your benefits, a compensation claim would be pointless for many. The compensation is ignored, as the government prefers the party responsible for your injury to pay, rather than the benefit system.
Within your claim, you may have seen reference to the recoupment system, or CRU for short. When paying compensation, the defendant (usually the insurer of the defendant), must repay benefits and NHS costs to the government. By making a compensation claim, you are actually making a claim for the government to be reimbursed. As part of this arrangement, your compensation will be ignored, if held separately from your personal funds, in a peersonal injury trust.