An analysis of the structure of the income taxation of trusts

Robson, Michael K (1981) An analysis of the structure of the income taxation of trusts. LL.M(R) thesis, University of Glasgow.

Abstract

By reason of its nature as a legal concept, the trust is destined to fit awkwardly within any statutory system of taxation. It is intended in this dissertation to present an analysis of the present structure of the income taxation of trusts, noting certain aspects of the role of the trust in income tax planning. For ease of presentation, the work is divided into three parts. Part 1 is primarily concerned with the rudiments of the income taxation of the trust. In particular, there is presented an examination of the means by which the scheduler system is adapted for the purposes of trust taxation. The basis of the liability to tax of both the trustee and beneficiary is discussed; considerable attention being focused on the nature of the beneficiary's interest under a trust as the factor determing the Schedule by virtue of which the beneficiary is chargeable to tax. Also comprised in Part 1 is an examination of the machinery provided by sections 16 and 17, Finance Act 1973 for the taxation of discretionary and accumulation trusts. The discussion in Part 1 relates exclusively to the taxation of the trustee and beneficiary. However, Part 2 is concerned with the taxation of the truster and comprises an analysis of the operation of the anti-avoidance provisions of Part XVI, Income and Corporation Taxes Act 1970, as they apply to the trust concept. In order to ascertain the scope of Part XVI consideration is given to the interpretation of the terms 'settlement' and 'settlor' as used therein. By virtue of the provisions of Part XVI the opportunity for the avoidance of income tax by means of the trust is severely limited. This limitation is achieved in general by the prescribing of circumstances in which the various flows of income (and to a certain extent, capital) associated with the trust may be redirected to and treated as the income of the truster. The discussion is on a practical level, although the theoretical disharmony between certain sections of Part XVI is considered. It is demonstrated in Part 2 that the only trusts which may be utilized effectively for the purpose of avoiding income tax are settlements of capital. For the sake of completeness, in Part 3 there is provided a general description of the capital gains and transfer tax treatment of the trust. Because of the enormity of the subject of trust income taxation, it has been necessary to restrict the scope of this analysis as far as possible to a consideration of the taxation of trusts resident and domiciled in the United Kingdom. The law stated is as at 1st June, 1981.

• Item Type: Thesis (LL.M(R))
• Qualification Level: Masters
• Keywords: Economics
• Date of Award: 1981
• Depositing User: Enlighten Team
• Unique ID: glathesis:1981-71981
• Copyright: Copyright of this thesis is held by the author.
• Date Deposited: 17 May 2019 13:32
• Last Modified: 17 May 2019 13:32
• URI: https://theses.gla.ac.uk/id/eprint/71981