I have a discretionary trust that has an offshore fund investment.
This is a reporting fund and the 2019/20 excess reportable income was high enough to generate a £500 tax liability, but the trust generated very little income in the year and so the distributable income was a negative for 2019/20.
I have discussed with the trustees this investment is not really suitable, but we are where we are.
I was thinking the tax could be put to capital, as there is no ‘real’ income. As we would for an accrued income scheme.
I suppose the argument against this is that when (if?) any income is paid out that will be posted to the income account.
Although it is likely the case there will be no payment out until the investment is cashed in when it will be posted to capital.
Be interested in views on this.