Does it make a difference in the above situation is the beneficiary is a life tenant of the UK trust owning the company which owns the property?
I ask because I was reading the analysis on the Billingham v Cooper case whereby the life tenant settlor was charged with benefit received from interest-free loans.
An independent analysis of the case said the following:
If the trustees of a life interest trust lend money to the life tenant, the rate of interest makes no practical difference. In fact, if interest is charged, it is not at all clear that it is collectable given that the trustees would be collecting the interest from the life tenant only to give it back to him. Even if interest is charged and paid, it is questionable, in the writer’s view, whether that interest is taxable, given that it is being paid and received by the same person. It is a long established principle of taxation that one cannot make a profit from oneself.
Thank you, comments and suggestions will be very much appreciated.
Sameera Nathoo