Taxes Consolidation Act 1997 section 797

Recovery of tax from trustee and payment to trustee of excess tax recoupment

Section 797 deals with the recovery and adjustment of income tax between a settlor and a trustee or beneficiary where income is treated as the settlor's under the anti-avoidance settlement provisions.

• A settlor who pays income tax on settlement income may recover the tax from the trustee or beneficiary to whom the income is payable, and may require Revenue to issue a certificate of the income and tax involved.
• If a person obtains a tax repayment in excess of what would have been due without the settlement provisions, the excess must be paid over to the trustee or beneficiary entitled to the income.
• Settlement income treated as the settlor's is deemed to be the highest part of the settlor's total income, meaning it is effectively taxed at the settlor's marginal rate.
• No repayment may be claimed under Schedule 32, paragraph 21 (relief for income accumulated under trusts) in respect of income already treated as the settlor's under these provisions.