Taxation logo taxation mission text

Since 1927 the leading authority on tax law, practice and administration

Nature of expenses

10 March 2009
Issue: 4197 / Categories: Tax cases , Trusts
CRC v Trustees of the Peter Clay Discretionary Trust, Court of Appeal, 19 December 2008

The trustees of a discretionary trust claimed that their expenses in managing the trust should be apportioned between income and capital.

HMRC rejected the notion saying that only expenses relating wholly to income could be attributed to income; expenses which related partly to income and partly to capital should be charged wholly to capital.

The Special Commissioners had sided with the trustees but the High Court allowed HMRC’s subsequent appeal. The trustees appealed.

The court ruled that under general law only expenses which had been incurred exclusively for the benefit of the income beneficiaries could be charged against income.

Those relating both to income and capital had to be charged against capital.

However if professional fees incurred by trustees for accountancy services could be apportioned between fees attributable to dealing with the trust income and those attributable to dealing with capital the fees charged by...

Only subscribers may read the full article

Alternatively, you can register free of charge to read a limited amount of subscriber content per month.
Once you have registered, you will receive an email directing you back to read this item in full.
back to top icon