Successful application for income tax overpayment relief

Case of the month

Introduction

Our client is the beneficiary of a discretionary trust. With a discretionary trust, all distributions received by beneficiaries are treated as if they had already been taxed at 45%. Therefore, beneficiaries who are not additional rate taxpayers should claim the additional trust tax refund from HMRC.

Issue

Our client lives overseas and was unaware that his trust income was taxed in the UK at 45%. They had received trust distributions for several years without knowing that they needed to complete Form R40 and send it to HMRC to receive the refund.

How we solved it

Once our client discovered he was able to recover the tax, he hired us to analyze his situation and reclaim the additional tax he had paid. We did calculations to understand their situation and how much they were entitled to recover. As they were not UK residents and had no other UK income, their trust distributions were less than the personal allowance and UK tax was not required. We have completed Form R40 for all relevant years and have written to HMRC along with the forms to explain the situation.

The result

Once HMRC had time to review our documents, they accepted our findings and accepted our request to refund the tax to our client. This was a brilliant result for our client, as he had unknowingly paid thousands in taxes over the years and was able to get them back.

Next steps

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