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bigduckontax, Accountant
Category: Tax
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Can you give me an example of the format of the annual accounts

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Can you give me an example of the format of the annual accounts that are required for a private discretionary trust?
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Customer: replied 2 years ago.

Dear Nicola,

Yes, thank you I am quite happy to wait. One point that I m particularly interested in is in respect of the income and expenditure account.

Should the income disclosed be the actual amount received of tax deducted and ignoring the tax credit attached to dividends, which means that the only tax debited to the I & E account will be any additional income tax payable, OR

Should Total Gross income for tax purposes be shown and deductions the dividend tax credit and the tax deducted from other income be shown as separate items including any additional tax payable?

Many thanks,


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Thank you for your patience,

Hello Tony, I am Keith and happy to be able to assist you.

Here from the Gov UK web site are the general directions for the maintenance of trust accounts:

The essential feature of all accounting is that the accounts should reflect a true and fair view of the organisation's income and expenditure for any period. My opinion is that the actual sum received be debited to cash/bank and credited to income received ledger headings. The tax credit attached can be ignored and any additional tax payable, if any, be debited to the I & E account.

I would present the accounts in the conventional Income and Expenditure Account and Balance Sheet format. Putting the gross amount through as income and the tax liability as expenditure is perfectly acceptable but involves more book keeping entries and basically is an unnecessary palaver which, in the words of my old boss, 'Doesn't alter the price of cheese.'

I would be inclined to stick with my first suggestion. I do hope I have shown you a way forward in this matter.

bigduckontax, Accountant
Category: Tax
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