Time limit for tax credit on trust distributions

The claimants were beneficiaries of a Guernsey-resident retirement trust. Their adviser asked HMRC to confirm that extra-statutory concession (ESC) B18 applied to allow tax credits on distributions from the trust with no limitation for payments out of income received by the trustees more than six years before the year of assessment of the payment.

HMRC said credit under ESC B18 was limited to payments out of income received not more than six years before the year of assessment of the payment. The adviser asked HMRC to reconsider but before HMRC replied the distributions went ahead. The income on which they paid tax was treated as the claimants’ income for 2018-19. The beneficiaries then claimed tax credit of UK income tax paid by the trustees on UK source income arising for all years.

HMRC allowed the claims for the years from 2012-13 but rejected those for the years...