Trust management expenses

The longstanding and, at times, acrimonious, argument over the accounting for trustee expenses has been brought to a conclusion by the Court of Appeal in Revenue and Customs Commissioners v Trustees of the Peter Clay Discretionary Trust.  The judgments of the Court of Appeal, High Court and the Special Commissioners are here. 

That having been said, the Revenue have been noticeably quiet over the decision and the Revenue guidance for the  2008-2009 tax returns (Help Sheet 392, with an issue date of 12-2008) continues to reflect their previous, and now out of date, view. 

For many of the smaller or simpler discretionary trusts this will be most relevant in the context of the deductibility, for RAT calculation purposes, of the expense of trustee fees where the HMRC guidance continues to state that all such fees are not allowable.  This view was founded on the argument that trustee fees are not in the nature of an expense of the trust and, are not, therefore, liabilities of the trust which can be deducted even if they do relate to trust income.  The Court has decided otherwise.