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HMRC internal manual

Trusts, Settlements and Estates Manual

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HM Revenue & Customs
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Introduction to trusts: legal background - trust law: sham trusts

Sometimes in the course of an enquiry, HMRC may argue that, while there is apparently a technically valid and fully executed trust deed, the trust is a ‘sham’. HMRC’s position would be that the trust was set up with intentions other than as expressed in the deed, and the trustees had no intention of acting on the terms of the trust.

It is purely a question of fact whether or not a trust is a sham.

Under TSEM1711 and TSEM2160 technical advisers in HMRC Trusts & Estates Technical Edinburgh can advise on the construction of a particular trust deed as it appears. They may also give general advice on the concept of ‘sham’.