In Lily P Tang v HMRC [2018] TC 6965 the FTT decided that a bare trust for a family member can exist without formal documents if that is supported by other evidence.
- The taxpayer had more than $900,000 in a bank in Singapore.
- She said that this was being held in a bare trust for her parents-in-law who realised the sum from the sale of a restaurant business and from an inheritance
- She administered the account entirely in accordance with the parents’-in-law instructions, as was evidenced by bank statements
- She worked as an NHS midwife. Her husband worked in a bank. Their earnings did not allow them to accumulate such a large amount as savings.
- There was no trust deed, but the parents in law provided a statement that the funds were held in a bare trust.
HMRC took the view that without a deed, no Trust could exist in law.
The tribunal found that the evidence clearly showed a bare trust had been created. As such, Mrs Tang was a trustee and the trust's income was not taxable in her hands.
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Lily P Tang v HMRC [2018] TC 6965
