Anti-avoidance and NR trusts

Anti-avoidance and NR trusts

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If a UK resident individual receives a capital payment from a non-resident trust there is usually a raft of anti-avoidance legislation that bites under the "transfer of assets abroad" rules.

But if the non-resident trust is a settlor-interested trust, the settlor being UK resident who personally declares all trust income and gains on his own return, does that circumvent the anti-avoidance legislation that would otherwise apply to the beneficiary?

Thanks

With kind regards

Clint Westwood

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By Portia Nina Levin
09th Jan 2017 10:43

With a non-resident settlor-interested trust, if there was not a charge under the settlements legislation, all of the income would be taxable on the settlor under the TOAA legislation, in any event. That would trump a charge under the capital payments leg.

However neither provision applies where the income concerned is taxable on the individual by virtue of a provision outside the TOAA legislation. ITA 2007, sections 721(3C) and 728(2A).

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