§ Mr. Norman Lamont
We have considered the implications of the House of Lords' recent decision in the case of Dawsonv CIR, and have decided that the present law does not deal satisfactorily with the residence status for income tax purposes of trustees in cases where the trustees of a settlement include both a United Kingdom resident and a non-resident. We therefore propose to introduce new rules to determine the residence status of 482W such "mixed residence" trustees. Provided that the settlor was not resident, not ordinarily resident and not domiciled in the United Kingdom at the time he made the settlement (and at any later time when he provided funds), the trustees will be treated as not resident in the United Kingdom. Otherwise "mixed residence" trustees will all be treated as United Kingdom resident.
This proposal will not affect trusts where the trustees are all United Kingdom residents, or all non-resident. In those cases, the existing rules will continue to apply.
There will also be similar rules governing the residence status of personal representatives of a deceased person, where they include both a United Kingdom resident and a non-resident.
There will also be provisions, applying to all trustees and personal representatives, to make it clear that income tax assessments may be made on any one or more of them.
Further details of the proposals are set out in an Inland Revenue press release published today. The necessary provisions have been tabled for Committee stage of the Finance Bill.