Extensive reforms to the taxation of offshore trusts in recent Finance Acts were meant to protect foreign domiciled settlors from arising basis taxation, with respect to foreign income and gains of trusts they have created. Unfortunately, poor statutory drafting means that in many situations this objective has not been achieved. Arguably, the most serious defect in the legislation concerns gains arising on the disposal of certain non-UK collective investment schemes, which are common trust investments. It was widely hoped that this defect would be amended. However, the government has just announced that, for the time being at least, it is going to do precisely nothing about it.
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