Jurisdiction(s):
United Kingdom

Murphy v HMRC: Court of Appeal rejects six-year limit; ESC B18 affords freestanding credit for trustees’ tax on non-resident trust distributions; legitimate expectation and EU law assessed

Published on: 24 May 2023

Published by a LexisNexis Tax expert

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Murphy v HMRC [2023] EWCA Civ 497

In this case, a non-resident trust distributed over £9m to beneficiaries resident in the UK. The trustees asked HMRC to confirm that, under ESC B18 (1999), those beneficiaries could claim credit for UK income tax previously paid on the trust’s income, whether that income arose within the preceding six years or over a longer span. HMRC accepted the claim for six years (and appears to have allowed one earlier year by mistake) but rejected the balance as it related to earlier periods. The beneficiaries therefore issued judicial review proceedings to seek recognition of their right to credit for tax the trust had paid in those earlier years. ESC B18 seeks to remedy a legislative anomaly (originally in sections 686–687, 809 of the Income and Corporation Taxes Act)...

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