DT applications and claims: Non-resident beneficiaries of UK trusts
Potential difficulties with claims under ESC/B18
Calculation provided by agent or claimant
Where an agent is also a trustee, or acts for a trustee, they may provide a calculation of the underlying relief due under ESC/B18 together with the claim. You should still obtain the trust file to verify the figures, and perform your own apportionment of the income. If FOTRA securities are shown separately by the agent, and the interest article of the treaty restricts relief, you should accept the trustee’s figures for FOTRA securities as long as the total for FOTRA securities and for interest matches the total for interest in the trustees’ return.
Where your calculation differs from that given in support of the claim you will need to make payment by reference to your calculation, and explain why your calculation is correct to the agent.
Calculation provided by agent (or claimant) showing income from a sub-fund not shown in trustees’ tax return
You may receive a claim, together with a calculation by the trustees or their agent which shows income apportioned to a fund within the trust that has not been detailed separately in the trustees’ return. Trustees are not required to submit separate returns for sub-funds or to provide details of them with the main return. You should use the figures provided by the trustees rather than the figures in the trust return, provided that the figures given by the trustees for the sub-fund(s) do not exceed those given in the trustees’ tax return for the total trust income for each source.
Trust appears to be discretionary but RAT not paid
You may receive a claim that is supported by a tax certificate(s) showing tax deducted from the underlying income, but which indicates that further tax is to be accounted for at the Rate Applicable to Trusts. You will need to ask the trust district whether the trust is liable to tax at the Rate Applicable to Trusts. If it is you will need to be sure that the conditions of ESC/B18 have been met, in particular that the trustees have made returns for the relevant year and paid any tax due. You should also ask the claimant for a correctly completed tax certificate showing the amount of tax deducted.
Trust return includes income not taxed at the Rate Applicable to Trusts