Demergers: trust Law
The first question to consider is whether the demerged shares are capital or income in the hands of the trust. This question falls to be determined in accordance with the general principles of trust law. If the law of any part of the United Kingdom or the Irish Republic applies the position is as set out in below. If the trust is governed by the law of any other country and it is suggested that these principles do not apply guidance may be obtained from HMRC Trusts & Estates - Bootle.
In the case of an indirect demerger in general the issued shares are received as an addition to capital. This follows from the High Court decision in Sinclair v Lee (1993), which was not a tax case. The court held that the shares to be distributed in the proposed indirect demerger of ICI, details of which may be found in EXTEL, would be received by the trustees as capital and not as income. The court was dealing with the specific case, where the value of the issued shares was over 50 per cent of the value of ICI before the demerger. The decision is not necessarily applicable in all cases involving indirect demergers. If, in a small case, the trustees treat the issued shares is less than 10 per cent of the value of the shares in the distributing company before the demerger, or less than £5,000, the trustees treat the issued shares as income belonging to one or more life tenants, in accordance with CG33931, it should be assumed that the treatment is correct. The Capital Gains Tax treatment is as in CG33931, but subject to the variation in CG33930.
In the case of a direct demerger, the demerged shares are generally received by the trustees as income of the trust, because as a matter of company law they take the form of a dividend paid out of the accumulated profits of the distributing company. This follows principles laid down by Lord Russell of Killowen in the case of Hill v Permanent Trustee Co of New South Wales  AC720 at pages 730-732 in the Privy Council. This was not a tax case, and strictly concerned the law of New South Wales, but the principles have been followed by Courts in England & Wales and Scotland.
Corporation Tax Office
If you are unable to discover whether a demerger was direct or indirect you can obtain the information from the Corporation Tax office.