Trust management expenses: ‘properly chargeable to income’: apportionment and tax: recording and evidence: expense not separately recorded: time records not kept: other documentation
In the absence of time records, there may be other documentation that shows that expenses have been incurred exclusively on income benefit, and can assist with apportionment. This may vary from trust to trust.
Invoice states ‘Accountancy services £x’. The accountants have not kept a record of time spent exclusively on income matters for the trust. The trust accounts prepared by the accountants show a high volume of complex capital transactions; income is bank interest and dividends. The trustees should decide whether any part of the cost is exclusively for income benefit, by reference to the trust accounts. The accountants’ work on accounting for the bank interest and dividends was relatively light, while their work on accounting for capital transactions was relatively heavy. By reference to the volume and complexity of the various accounts they can apportion the costs to income and capital.
Invoice states ‘Accountancy services - tax return £x’. The accountants have not kept a record of time spent exclusively on income matters for the trust. The tax return includes the core return + y pages CGT, and z pages foreign income. By reference to the return, the trustees see that part of the costs that relates exclusively to income. They can apportion an appropriate part of the cost to income.
Invoice states ‘Accountancy services - additional tax services £x’. In addition to the tax return, the accountants have dealt with a high volume of income transactions, including overseas accounts and claims to Double Taxation Relief; there is a small volume of simple capital transactions that year. The accountants supply the trustees with a schedule of this work. The trustees should decide whether any part of the cost is exclusively for income benefit. By reference to the schedule, the trustees can apportion an appropriate part of the cost to income.
Invoice states ‘Accountancy service - £x property business and £y other accountancy services’. £x is already taken into account against the rental income. The trustees have to decide what to do about the other £y. The accountants have drawn up the trust accounts, and have provided tax advice and prepared the trust return. The accounts and return show rental income, bank interest and dividends; there are no capital transactions, and consequently no CGT pages in the return. The trustees decide that all the £y relates exclusively to income, and charge £y to income.
Invoice states ‘Tax advice £x’. The advisers supply y pages of advice on income tax, and z pages on IHT and CGT. By reference to the advice, the trustees apportion y to income.