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What is trustee borrowing?

Trustee borrowing is where¹:

1. Ìý

   •ÌýÌýÌýÌý money is lent to the trustees

2. Ìý

   •ÌýÌýÌýÌý an asset is lent to them

3. Ìý

   •ÌýÌýÌýÌý an asset is transferred to them and they assume a contractual (and not merely fiduciary) obligation, whether absolute or conditional, to restore or transfer that or any other asset to any person

These contractual obligations are referred to as 'loan obligations' throughout the provisions.

HMRC acknowledges² that it is not unusual for the trustees of a non-resident trust to borrow money from a non-resident company which they control. It does not accept the argument that, in this situation, the trustees are effectively 'borrowing' from themselves and therefore outside these anti-avoidance provisions. HMRC considers that this is still a loan obligation, as are loans from the beneficiaries³; it is the use to which the borrowing is put and not where the borrowing is from that matters.

HMRC considers that money borrowed before these provisions came into force (ie