Claiming losses by non-resident trustees

Trusts Discussion
1

Hi all.

I am dealing with a contract settlement case where the HMRC inspector is wanting to no allow 2008/09 losses to later year gains as the foreign trustees are out of time to claim it. This is not a settlor-interested trust so all gains are matched under s.87 TCGA.

Has anyone come across this situation?

Having read HMRC’s CGT manual, I think it does specify that the inspector should allow these losses under a contract settlement. (I need a double check this).

However, I was thinking, If there was no contract settlement then how would non-resident trustees claim these losses in the UK especially if they don’t have file any UK tax returns except for maybe IHT returns.

The CGT manual does say that a claim can be made on paper etc and sent to HMRC. Not that there is anything to hide but this would bring the trust into HMRC’s radar and knowing HMRC they may want to look into the tax affairs of the trustee/beneficiaries.

I also understand that post LDF , HMRC is taking a hard stance on this now.

I would appreciate your view on this and input from anyone who has dealt with this.

Sameera Nathoo

2

I agree with your position. What you say about HMRC’s stance in this case seems to contradict the wording of s. 87(5A) which provides that any allowable loss of the trustees is to be treated as an allowable loss to be taken into account in calculating the ‘stockpiled’ gains. I have previously wondered at the necessity of this wording but perhaps it is to deal with exactly the sort of situation you find yourself considering. Many offshore trusts don’t file anything with HMRC because it is an unwarranted cost bearing in mind the trustees might never confer a benefit on a UK resident beneficiary.

Paul Davies
DWF LLP

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