TSEM4402 – Settlements legislation: capital sums paid to settlor – ITTOIA/S633: submission to HMRC Trusts Head Office London

You should first prepare a schedule showing the amounts of income and distribution in each year.

Where a loan is matched wholly with income arising to trustees in 2004-05 or later years there will be no liability on the settlor as the notional tax relief will fully cover the charge and a submission is not required.

Where the trustees are UK resident and the loan is matched with undistributed income of 2003-04 or earlier years the case should be submitted to HMRC Trusts Head Office London who are responsible for determining whether liability arises under Section 633.

Where the trustees are non-resident special rules apply to deny notional tax relief where the loan is matched with any income which has not been taxed in the UK. Such cases should be submitted to HMRC Trusts Head Office London for further advice.