I knew that wasn't the question. But all babies whose parent gets child allowance begining in Sept. 2002 is entitled to a £250 baby bond and if the parent doesn't claim it the Government opens an account anyway.

It took years, decades, for the US and UK treasuries to negotiate a treaty acknowledging pension trusts and entitlements as taxable only when received. That right to defer taxation arises only from domestic law in every other case. Mostly the capital and interest in question do not justify the professional expertise required to deal with reporting requirements in the "other" country of taxation. That's why it is deplorable that there are automatic penalties of $1,000 and $10,000 etc. for nonreporting of foreign accounts, trusts, limited companies, etc.

As I wrote earlier, with a bit of advance planning you could have avoided some of the reporting requirements. A proper trust created by a US person would likely have entailed filing form 3520, which is not nice, but your arrangement doesn't seem to require it:
Instructions for Form 3520 (2008)
A child's trust fund might:

Reportable Event
A reportable event includes:
1. The creation of a foreign trust by a U.S. person.
2. The transfer of any money or property, directly or indirectly, to a foreign trust by a U.S. person, including a transfer by reason of death. This includes transfers that are deemed to have occurred under sections 679(a)(4) and (5).
3. The death of a citizen or resident of the United States if:
The decedent was treated as the owner of any portion of a foreign trust under the grantor trust rules or
Any portion of a foreign trust was included in the gross estate of the decedent.

Penalties
A penalty generally applies if Form 3520 is not timely filed or if the information is incomplete or incorrect. Generally, the penalty is:
35% of the gross value of any property transferred to a foreign trust for failure by a U.S. transferor to report the transfer,
35% of the gross value of the distributions received from a foreign trust for failure by a U.S. person to report receipt of the distribution, or
5% of the amount of certain foreign gifts for each month for which the failure to report continues (not to exceed a total of 25%). See section 6039F(c).