Commentary on Sections Structure of Chapters Overview Section 538: Recovery of tax from trustees
2117.This section provides a right of recovery for an individual who, although the rights in question under the policy or contract are held by non-charitable trustees, is liable to tax on a gain or gains under this Chapter because section 465(1)(b) applies. It is based on section 551 of ICTA.
2118.Subsection (1)(c) defines the tax that may be recovered from the trustees. Broadly, it is the extra tax paid on the gain or gains after any top slicing relief. Where top slicing relief is available and there is more than one chargeable event in the year, with at least one gain giving liability by virtue of section 465(1)(b), subsection (4) provides that the relief is to be apportioned between the gains charged in working out the extra tax.
2119.Subsection (3) sets a cap on the amount that can be recovered from trustees, by reference to what they have derived from the relevant chargeable event.
2120.Subsections (5) and (6) allow the individual to require the Inland Revenue (rather than the Board of Inland Revenue) to certify an amount recoverable from the trustees. See Change 149 in Annex 1.