Non-resident trusts: have you been overcharged tax?

Brought to you by BTCSoftware

Non-resident trusts which received dividend payments in 2016/17 may have overpaid tax.

According to this guide on HMRC’s website, non-resident trustees are entitled to 7.5% dividend tax credits under Section 399 ITTOIA on any dividends that are included in their taxable income.

However, HMRC’s trust calculation did not take this into account for the tax year 2016/17. This means there could be a potential tax overpayment for non-resident trusts which received dividend income during the 2016/17 tax year.

What HMRC have told us   

The issue has been resolved for the 2017/18 trust tax calculation, but HMRC is aware that there are 2016/17 Trust Tax Returns affected by this. “We are working hard to identify those customers that are not aware they are affected or have yet to contact us and will take appropriate remedial action,” HMRC recently told BTCSoftware. “At this stage, we have no plans to issue a blanket communication to customers.”

How BTCSoftware has responded

AT BTCSoftware we believe it is important to inform taxpayers who may be affected by this. Our development team first contacted HMRC regarding this issue in May 2018 and have been repeatedly requesting for this to be corrected.

Our team has asked HMRC to contact trusts affected by this, but if you believe that your clients are affected by this issue, please contact HMRC directly so that they can re-calculate the return(s) and issue a refund for any tax overpaid.

Ongoing support

The BTCSoftware team will continue to work closely with HMRC and keep on supporting accountants and their practices by providing robust and compliant software.

Find out more about our support team or contact us here.