Correction of Errors in CGT Non-UK resident trust guidance on FA 2008 changes

HMRC have agreed that there are 2 errors in Example 6 of their published guidance on FA 2008 changes to CGT Non-UK resident trusts, on pages 11 and 12. In light of this, they have amended the guidance with revised examples 6 and 7. The complete, revised guidance is available to download here in Adobe (pdf) format. HMRC TEXT BEGINS

It has been pointed out to us that there are a couple of errors in Example 6 in the published guidance http://www.hmrc.gov.uk/cnr/beneficiaries-non-resident.pdf (pages 11 & 12). In light of these comments, we have amended our guidance containing revised versions of examples 6 and 7 which correct these errors and explain the issues more clearly. This will be published in the next few weeks, but in the meantime the revised version is attached.

Example 6 concerns the rules in paragraph 122 Schedule 7 FA 2008 which apply to unmatched capital payments at 6 April 2008. The original example 6 was incorrect at two points:

• The allocation of capital payments against the trustees’ gains in 2007-08 - Prior to FA 2008 where trustees’ gains arose in a year, there was no statutory rule on which unmatched capital payments for that year and earlier years should be matched. In practice the unmatched capital payments for that year and earlier years were added together and the trustees’ gain was allocated in proportion to the total capital payments each beneficiary had received. The old Example 6 incorrectly only took into account the capital payments made in 2007-08 to match with the 2007-08 trustees’ gains.
  
• The application of paragraph 122(3) Schedule 7 FA 2008 in determining the make up of unmatched capital payments at 6 April 2008 - This paragraph has the effect of treating the unmatched capital payments at 6 April 2008 as coming, as far as possible, from a later year rather than an earlier year.
  

The new example 7 covers the correct interpretation of both these issues. The new example 6 covers the rules in paragraph 122(1) & (2) Schedule 7 FA 2008.

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