HM Revenue and Customs v Trustees of the Peter Clay Discretionary Trust: CA 19 Dec 2008

The court was asked whether the Commissioners had been correct to disallow in a closure notice, the attribution in part to income in the year 2000-01 of expenses incurred by the trustees of a United Kingdom resident discretionary trust. The expenses claimed were (i) trustees’ fees, (ii) investment management fees, (iii) bank charges, (iv) custodian fees and (v) professional fees for accountancy and administration.
Held: It had not been open to the Special Commissioners to approach their task on the basis that: ‘in the light of the general principle of fairness ‘expenses incurred for the benefit of the whole estate’ should not be understood widely as meaning anything that is for the benefit of both the income and capital beneficiaries should be charged to capital and should not be attributed.’ The appeal was allowed to a limited extent, but ‘the onus of showing that some of the fees of the non-executive trustees related to advice for the exclusive benefit of income beneficiaries rests on the trustees.’

Arden LJ, Lloyd LJ, Sir John Chadwick
[2008] EWCA Civ 1441, Times 02-Jan-2009, [2009] WTLR 247, [2009] 2 All ER 683, [2009] STC 469, (2008-09) 11 ITELR 672, [2009] STI 79, [2009] 2 WLR 1353, [2009] Ch 296, [2009] BTC 50
Taxes Management Act 1970 56A, Income and Corporation Taxes Act 1988 686
England and Wales
At SCITPeter Clay Discretionary Trust v Revenue and Customs SCIT 27-Feb-2007
SCIT DISCRETIONARY TRUST – whether single fee for expenses of management that relate partly to income and partly to capital can be attributed partly to each for s 686(2AA) Taxes Act 1988 – yes – attribution . .
Appeal fromHM Revenue and Customs v The Trustees of the Peter Clay Discretionary Trust ChD 15-Nov-2007
. .
CitedIn re Bennett, Jones v Bennett CA 1896
The deceased’s estate held mainly an unsecured interest-bearing loan to a firm of which he had been a partner. On his retirement the loan was repayable on demand if conditions for the continued solvency of the firm were not met. The court was asked . .
CitedCarver v Duncan HL 1985
The court considered whether expenses, premiums paid in respect of life assurance policies, and the fees of professional investment managers, were properly to be set against the capital or income of a trust.
Held: Lord Templeman said: . .

Lists of cited by and citing cases may be incomplete.

Income Tax, Trusts

Updated: 31 October 2021; Ref: scu.278979