Readers’ forum: US retirement fund

I have been approached by a lady in her 80s who lived and worked for many years in the US but after the death of her husband returned to the UK some 15 years ago. As well as occupational pensions received from the US she also had an individual retirement account (IRA) with a value of about $0.5m.

In 2019-20 due to restrictions placed on non-resident investment in the US and the unwillingness of any UK investment house to assist (they would only consider helping if the fund value exceeded £5m) she was forced to liquidate the IRA and then to repatriate the funds to the UK.

Can Taxation readers advise on the tax treatment of this enforced encashment? Is there any alternative to it being treated as income in both the 2019 US tax return and 2020 UK tax return where it would appear she will ...