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bigduckontax, Accountant
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, my name's Ines. Some years ago I received funds from an

Customer Question

Hi, my name's***** years ago I received funds from an overseas trust which I paid directly to my food business, which then folded. The funds had been taxed already overseas, and I took no income from my business while it ran. Do I owe tax on these funds? For some reason I missed filing that particular year's tax return, and I am paying the cost, but would love your help.
Thank you very much
All the very best
Ines.
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.

Hello Ines, I'm Keith and happy to help you with your question.

Assuming that the overseas country has a Double Taxation Treaty with the UK then any taxes paid to that country are allowed as a tax credit against any UK taxation levied on the same income stream. These treaties, and there are hundreds of them, do not protect you from differences in rates of tax.

You should approach your tax office with a view to amending the return for the relevant year. As probably there is no or minimal tax due no one is going to get unduly worried over this sort of error. You may be charged interest on outstanding tax, but that is perfectly normal. After all HMRC will pay you interest on delayed moneys due to you.

I do hope I have been able to set your mind at rest on this matter.

Customer: replied 2 years ago.
Hi Keith,
Thank you so much for this and I apologise for taking so long to get back to you. I will check then on differences in tax rates, and hopefully that will be ok. I was still wondering though, whether I would have to pay any tax as, though the funds did go through my personal account, all the funds went to the business and not to me. The business subsequently folded and . I just want to avoid any further penalties and am happy to pay any tax due.
I am trying to fill in the tax return now, and there are two categories which may apply to me where I may need to fill out supplementary pages:
Foreign - discretionary income from non-resident trust
Trusts - beneficiary of a trust
Would you know which one applies to me? I am one of the named beneficiaries but the distributions are at the trustees discretion.
Many thanks
Ines
Expert:  bigduckontax replied 2 years ago.
From the tenor of your follow up question Ines you would appear to have been the beneficiary of the Trust as this was clearly not an income but some form of capital distribution. It would be normal for the trust to pay any tax due on the distribution before the payout takes place, but that depends upon the taxation regime applicable to the country within which the trust is resident and the presence of any Double Taxation Treaties in force.
Even HMRC tell you to take advice from a trusted, local professional in such situations. If the funds are substantial a slip up might cost you dear with an unexpected tax bill an no one wants one of those.
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3609
Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 2 years ago.
Thank you for your support.
Customer: replied 2 years ago.

Hi Keith,

Just one more question. I understand that there may be differences in tax rates from the origin of the trust and the UK (with regards ***** ***** tax treaty) and tax may be owed.

As the money went to my failing company, and not to me, would I still have to pay tax or would that be waived as the tax would have become the responsibility of the company?

Thank you so much for your help!!

Ines

Expert:  bigduckontax replied 2 years ago.

The wording of your original question was 'I received funds...' The fact that you subsequently paid those funds into your company is, regrettably, irrelevant. It is your money sunk and lost. The funds would have been taxable in your hands, but it would be normal for a trust to pay tax before distribution.

Customer: replied 2 years ago.

Hi Keith

Cool, that clarifies that.

Thanks again so much for all the advice you have given me.

All the very best

Ines

Expert:  bigduckontax replied 2 years ago.
Delighted to have been of assistance.

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