This is a known problem. See the following articles:
Here’s another article about the problem this year when there will be a week 53, and also because 6 April falls on a Saturday so some payments will fall on the previous Friday which is in a different tax year.
Tax position without the trust loan would be as follows:
1. Investment bond units are assigned to the beneficiary. This would be a capital distribution by the trust, with its IHT consequences.
2. Beneficiary cashes in the bond: income tax on the bond gain for the beneficiary, with top slicing relief.
3. Trusts do not benefit from top slicing relief, hence the above steps being done in this way.
The above is the straight forward position. What you are seeking is for step 1 to be done as a loan rather than a distribution. I do not know the answer to your question, but would be interested if you find out.
Total turnover c £200k.
What are the debts? Unpaid rent: then the landlord might pursue the trustees and secretary.
If there was no agreement, then was it a club with members, or was it a business that was called a club? Were subscriptions paid?
You need more information on how the club was being run. Does it seem like a business or a club run by a committee on behalf of members?
From your information I assume that the club was an unincorporated association.
In this situation the liabilities of the club are the liability of the members. Creditors are likely to approach members of the committee first.
If no accounts were prepared was there a functioning committee? Was bookkeeping being done? Payroll? Subscriptions collected? Is there a final list of members?
Who do they owe the £70,000 to? From my experience it may be
a brewery loan
unpaid expenses eg utilities, salaries
loans from members eg to keep the club afloat or to pay for fixed assets.
What is the likelihood that the creditors will chase payment? For a brewery loan see if you can find a copy of the agreement.
From the information that I have read, an unincorporated association cannot walk away from its liabilities. However actually collecting payment may be difficult. For example how would a creditor prove a particular person was a member of the club?
Thank you for your replies.
s483 confirms that the tax credit is available which is good news.
Now how to get the credit into the trust tax return? Comments on the Trust Discussion Forum say that the Trust tax Return doesn't have a suitable box to show the tax credit. One suggestion is to put the credit in box 17.4 which does result in the right tax liability.
Is the contract with a consumer or with a trade customer? My understanding is that consumer contracts are deemed to be VAT inclusive, whilst trade are exclusive, subject to what the contract says.
Consumer Rights Act and Consumer Contracts (Information , Cancellation and additional Charges) Regulations 2013 Sch 2(f) require quoting prices inc of VAT.
Full caveat here as I am not a VAT specialist.
I would say take the personal tax and trusts route of CTA. This is assuming it is still available.
I tell clients that I expect all tax returns to be done by Christmas and they need to help me to achieve this by bringing in their papers in plenty of time.
I explain that I aim for
1/3 filed by mid July so the 31 July payment on account can be the correct figure.
1/3 by September when I tend to go on holiday.
The final 1/3 by Christmas and this date is reserved for clients with more complicated tax affairs.
Last year I sacked a friend from being a client as they did not honour their promise to be better following the previous year's 29 January effort. We got to early December and I told them that they needed to find a new accountant.
I find that January is still busy with providing assistance on how to pay eg HMRC not sending out statements, HMRC statements showing the wrong tax liability etc.
It doesn't go perfectly but I now have only 2 tax returns where I have no information at all, and 6 where we are waiting for one piece of information that is not in the client's control