I agree that it seems inappropriate for the enforceability of trustee resolutions to be dependent upon whether it involves capital or income.
What if it involves both capital and income – does it create a short term interest in possession until the (HMRC) requirements for it to be enforceable over the capital element are met.
The CGT argument is, to my mind self-defeating if one looks at the position where a PR appropriates assets to a beneficiary. The appropriation takes effect on the date the PRs make the appropriation. This may be by resolution only. In some cases the PRs resolve to execute a deed of appropriation, in which case the appropriation will be effective as at the date of that deed. If the beneficiaries require shares to be appropriated and sold (without the resolution requiring any deed to be executed) when is property “actually transferred” – when the proceeds of sale are paid over?
My understanding is that once the trustees have completed a resolution to do something then that resolution is enforceable, subject to any condition or contingency referred to within therein, such as the execution of a deed or, if money is being lent, the provision of security, for example.
In the actual case in question, I believe the beneficiary will be entitled to the income from the date of the resolution, but will be treated as receiving it for UK income tax purposes on the date it is paid.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals