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HMRC internal manual

Trusts, Settlements and Estates Manual

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HM Revenue & Customs
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Ownership and income tax: express trust: oral trust - evidence

You should not accept that an oral trust exists simply because A or anyone else says there is one. A statement is not evidence. You need to see evidence that makes the statement true.

There must be evidence of: the intention to create a trust, the beneficial interest in the property, and who holds the beneficial interest; also of the date from which such a trust is said to exist.

Existence of an oral bare trust

For example, property is held in A’s name. A says s/he holds the property for B who has beneficial ownership of the whole property, and so B should be taxed on all the income. First of all, you would have to ask why the trust is not in writing, and it would be up to the taxpayer to explain.

The onus is on the taxpayer to provide evidence such that a court could find in all probability that B is the owner of the beneficial interest (TSEM9140).

If you need further advice on the validity of an oral bare trust, contact HMRC Trusts & Estates Technical Edinburgh.

Existence of an oral non-bare trust

It would be extremely difficult for someone to prove that an oral non-bare trust exists. First of all, you would have to ask why such a trust is not in writing, and it would be up to the taxpayer to explain.

It is unlikely that someone will claim an oral discretionary trust exists for income tax purposes, as it would not result in a lower income tax charge.

Refer any claim that an oral non-bare trust exists to HMRC Trusts & Estates Technical Edinburgh.