ESC B18 - Non UK res beneficary of UK trust

I have an Australian beneficiary of a UK trust who has been receiving discretionary payments with 45% tax credits attachted.

She has never reclaimed any of the tax credit attached to these distributions.

Is it correct that she can make a claim under ESC B18 for income received 5 years 10 months ago instead of the usual 4 year rule.

Thanks in advance

TSEM 10440 provides “Time limit: a beneficiary must claim relief under Extra Statutory Concession B18 within five years and ten months of the end of the tax year in which the payment was made”.

Malcolm Finney

Para 75 of the judgement in Murphy v HMRC [2021] provides:

" For these reasons, I consider that the better interpretation of §2b of ESC B18 is HMRC’s: relief is granted to the same extent as s. 18 FA 1973 and §§1 and 2a of ESC B18, i.e. to the extent that the payment is out of income which arose to the trustees not earlier than 6 years before the end of the year of assessment in which the payment was made.

Malcolm Finney

Apologies as I had forgotten the taxpayer’s appeal to the Ct of Appeal (see
Murphy v Revenue and Customs Commissioners* [2023] EWCA Civ 947 in which the Ct
found for the taxpayers on their judicial review claim.

"The taxpayers commenced judicial review proceedings in the Administrative Court against HMRC’s decision to reject their claims for an income tax credit in respect of income received from a non-UK resident trust and on which tax had already been paid by the trustees. The essential issue in the claim was whether ‘Concession 3’ of ESC B18, properly construed, included a six-year time limit or not.

The taxpayers’ claims were dismissed by the Administrative Court, who accepted that there was a six-year time limit.

On appeal, Newey LJ (giving the leading judgment of the Court of Appeal) reversed that decision and held for the taxpayers. In essence, the Judge accepted the taxpayers’ arguments on the construction of ESC B18 and that, as a result, no time limit existed".

Malcolm Finney