Settlements legislation: capital sums paid to settler: Submissions to Trusts & Estates Technical Nottingham
You should first prepare a schedule showing the amounts of income and distribution in each year.
Where a loan made between 2004-05 and 2009-10 is matched wholly with income arising to trustees in those years there will be no liability on the settlor as the notional tax relief will fully cover the charge and a submission is not required. This also applies where a loan made in 2010-11 or later is matched wholly with income arising to trustees in 2010-11 or later years
Where the trustees are UK resident and the loan is matched with undistributed income for a tax year where the rate of the notional tax credit is less than the marginal rate of the settlor the case should be submitted to HMRC Trusts & Estates Technical Edinburgh who are responsible for determining whether liability arises under ITTOIA/S633.
Where the trustees are non-resident special rules apply to deny notional tax relief where the loan is matched with any income which has not been taxed in the UK. Such cases should be submitted to HMRC Trusts & Estates Technical Edinburgh for further advice.