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HMRC internal manual

International Manual

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UK residents with foreign income or gains: certificates of residence: for trusts

Trusts are not themselves liable to tax in the UK, but the trustees may be liable to tax in the UK. A trust therefore cannot be a resident of the UK for the purposes of most UK Double Taxation Agreements (DTAs). Accordingly a Certificate of Residence (CoR) cannot normally be issued in respect of a trust. However, some trusts are included within the definition of ‘resident of a Contracting State’ in specific DTAs. In those limited circumstances a certificate of residence can be issued in respect of a trust. It is therefore essential that the relevant DTA is checked on receipt of all applications.

Trustees as a body (rather than the trust) are regarded as a single person. Where the trustees as a body are regarded as resident in the UK they will be entitled to the benefits of a DTA as they are liable to tax in the UK in respect of the income of the trust. Subject to the comments in the next paragraph a CoR can be issued in respect of a UK resident body of trustees.

However, consideration also needs to be given to the definition of ‘resident of a Contracting State’ with regard to ‘is liable to tax’ or ‘is subject to tax’. If the body of trustees is exempt from UK tax for whatever reason then we cannot certify residence if the relevant Article refers to ‘is subject to tax’ whereas we can certify residence if it refers to ‘is liable to tax’. Again it is essential that the relevant Article (most commonly, Article 10 - Dividends, Article 11 - Interest, and Article 12 - Royalties) of the DTA is checked on receipt of all applications.

UK Resident Body of Trustees

From 6 April 2007 a body of trustees is regarded as UK resident if all the trustees are resident in the UK. The body of trustees will also be regarded as UK resident if:

  • At least one trustee is resident in the UK, and
  • At least one trustee is not resident in the UK, and
  • The settlor was resident, ordinarily resident or domiciled in the UK at any relevant time (seeTSEM1461 (HMRC website) - external users can find the guidance at )

Information required and checks to be made

As with any request for a CoR, the information listed at INTM162020 should be provided and guidance at INTM162030-90 followed before issuing a CoR in respect of a trust. The trust should also however provide a list detailing all the trustees names with confirmation or otherwise of UK residence.

Confirm which CoR to issue

It is important that you check the definition of ‘resident of a Contracting State’ contained in the residence article (usually Article 4) of the specific DTA relevant to the income concerned to ensure that the correct wording of the CoR is used.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000) INTM162170(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Wording for CoR to trust with resident body of trustees

To whom it may concern

I certify that to the best of HM Revenue & Customs’ knowledge, the Trustees of [Name of Trust]……..……………. as at [date] constitute a ‘body of persons’ resident in the UK in accordance with Article [number applicable to residence - usually 4] of the Convention in force between the UK and [name of other state].

Date

Office Stamp……………………………………………………………………. Name and signature of Officer

Wording for CoR to trust/charitable trust included within the meaning of ‘resident of a Contracting State’ in the specific DTA

To whom it may concern

I certify that to the best of HM Revenue & Customs’ knowledge, the [Name of Trust/Charitable Trust]……..……………. as at [date] is resident in the UK in accordance with Article [number applicable to residence - usually 4] of the Convention in force between the UK and [name of other state].

Date

Office Stamp…………………………………………………………………… Name and signature of Officer

As stated at INTM162030, HMRC can also certify residence for a particular period, so long as that period does not end any later than the date of issue. The wording in each case as above can therefore be amended to refer to the period for which certification is required if necessary.