New queries, issue 4230

Repayment or not?

I have just acquired a new client whose own affairs are fairly straightforward but there is a discretionary trust which she set up several years ago under a deed of variation.

I understand that the trust income is therefore assessable on her but that doesn’t seem to have happened in the past rather she only includes her own pension and investment income (and is not into higher rate liability). The trust income has been declared on the trust return and tax at the higher rate paid as appropriate.

There have not been any discretionary payments to her from the trust indeed very few discretionary payments have even been made to other beneficiaries.

My initial fear was that failing to assess the trust income on her would give rise to arrears of tax as it would push her into higher rate ...