Non-duplication rules definition

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An offshore trust is established by a non-domiciled settlor. The trust owns an offshore company which holds shares in a UK company. The settlor becomes UK resident non-domiciliary (res non-dom), but deemed UK domiciled. The beneficiaries include the settlor and other UK res non-dom (deemed dom) persons (including the beneficiaries). The UK company pays dividend to the offshore company, which in turn pays an equivalent dividend up to the trustee. The trustee makes a discretionary income distribution to the beneficiaries. Is there any exemption for income tax charge for the beneficiaries on account of settlors having already been taxed on the UK dividends arising in the offshore company under section 720 of the Income Tax Act 2007?

An offshore trust is established by a non-domiciled settlor. The trust owns an offshore company which holds shares in a UK company. The settlor becomes UK resident non-domiciliary (res non-dom), but deemed UK domiciled. The beneficiaries include the settlor and other UK res non-dom (deemed dom) persons (including the beneficiaries). The UK company pays dividend to the offshore company, which in turn pays an equivalent dividend up to the trustee. The trustee makes a discretionary income distribution to the beneficiaries. Is there any exemption for income tax charge for the beneficiaries on account of settlors having already been taxed on the UK dividends arising in the offshore company under section 720 of the Income Tax Act 2007? We have assumed that: • the distribution to the beneficiaries is within the scope of section 731 of the Income Tax Act 2007 (ITA 2007) • the income of the offshore company and the trust does not constitute ‘protected foreign source income’ within the meaning of ITA 2007, ss 721A and 729A...