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Trustees of Raymond Taube Discretionary Settlement Trust v HMRC (and related appeals)

In Trustees of Raymond Taube Discretionary Settlement Trust v HMRC (and related appeals) (TC00735 – 20 October) a family settlement received a special dividend of £240 000 from a family company following a reorganisation of its share capital. The trustees failed to account for tax on this and HMRC issued an amendment to the trust return. The trustees appealed contending that the dividend should be treated as capital rather than income. The First-Tier Tribunal rejected this contention and dismissed the appeal. Judge Berner observed that ‘as a general rule profits of a company that are distributed by the company by way of dividend are received by trustees as trust income’. A special dividend was ‘trust income unless in substance the transactions amount to something other than a distribution’. The dividend here was a cash dividend rather than a capitalisation. (An appeal by a similar family settlement was...

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