The Gazette 1983

APRIL 1983

GAZETTE

Addendum Since this article was written, the U . K. General Election necessitated the deletion of a number of sections from the U . K. Finance Bill 1983, including sections confirming:— (i) That in most cases the acquisition cost of trust-assets to which a beneficiary becomes absolutely entitled as against non-resident trustees is restricted to the consideration, if any, given by such beneficiary; (ii) The liability in certain circumstances of U . K. resident beneficiaries for capital gains tax on gains made by non - r e s i d e nt trustees with the d e f i n i t i ons of 'settlement' and 'settlor' broadened. Presumably, the new government will incorporate similar provisions in the next U . K. Finance Bill. & PHOTO-COPIERS INTERNATIONAL LIMITED Phone: 304211 Telex: 33164 MEMBER OF THE EUROPEAN COPIER COUNCIL We offer you a complete range of machines to suit your needs, low volume or high volume, and most important fast efficient service at very reasonable prices. Should you have an existing copier and you are not happy with the service you get, or the price you pay for supplies and meter charge, then give us a call you could be surprised with the savings, nationwide service.

beneficiary, are regarded as trust gains for the year. The "trust gains for the year" are then treated as chargeable gains accruing to any beneficiary of the settle- ment who actually received a capital payment from the trustees in that year, or received a capital payment from the trustees in earlier years in respect of which no trust gains were attributed. The chargeable gain is then attributed in proportion to the capital payment received by the beneficiary but the gain so attributed is not to exceed the payment received. For example, under a non-resident settlement made in 1982, the trustees make gains of £ 1 0 , 0 00 in the year '83/'84 and then, in the following year, make capital distributions to two U . K. resident beneficiaries of £ 2 0 , 0 00 to beneficiary A and £ 6 0 , 0 00 to beneficiary B. The gains will be apportioned as to one-quarter to beneficiary A (£2,500) and three-quarters to beneficiary B (£7,500). Note that a beneficiary is not chargeable to U . K. Capital Gains Tax unless he is domiciled in the U . K. at s ome t ime in the year in which he receives the benefit. These rules apply to will trusts as well as settlements, but it should be borne in mind that if the settlor was not domiciled in the U . K. when he made the settlement or at the time the gains were made, then the old rules still apply — that the total gains of the non-resident trust may be apportioned annually between U . K. resident beneficiaries who are likely to benefit from the settlement. For example, if the beneficiaries of a n o n - U . K. resident discretionary settlement are the children and grandchildren of the settlor and under a letter of wishes the settlor has indicated to the trustees that he wishes the trust fund ultimately distributed to his grandchildren, then, if this letter of wishes is disclosed to the U . K. Revenue, they will apportion the gains between the grandchildren in equal shares; if it is not disclosed, then they are likely to apportion the gains of the settlement between all the resident beneficiaries each year. There are a large number of Irish-resident donors and trusts with potential beneficiaries resident in various parts of the United Kingdom. The Doub le Taxation Agreements at present in force do not appear to cater for the problems arising. The Taxation Committee of the Law Society is considering the problem with a view to making representations in appropriate quarters to see if inequities can be removed. U . K. tax is a complex and specialised subject and, quite apart from the questions of Capital Gains, there may be Capital Transfer Tax and other implications to be borne in mind. Irish professional advisers would be well advised to seek assistance from suitably qualified U . K. colleagues before taking decisions and making distributions to benefi- ciaries resident in the U . K. •

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