opportunity to study the legislative result of the decision announced in the UK Chancellor of the Exchequer's new budget which would retrospectively tax offshore trusts that had previously escaped taxation.

The Chancellor has announced the planned retrospective tax charge on offshore trusts formed before March 19, 1991.

That year, after the enactment of the UK Finance Act, the settlor (or trust creator) of a new offshore trust became chargeable for tax on any gains made by the trust, if the settlor, the settlor's spouse or children (and, following this month's UK budget, grandchildren) or companies they control, can benefit from it.

Bermuda Association of Licensed Trustees president Tim Hawkins commented: "This is another anti-(tax) avoidance measure and it will have an impact on some of our accounts. But exactly what that is right now, we don't know. We will await draft legislation next month to see exactly what is being proposed.'' Onshore governments are increasingly looking to ways to limit methods by which their citizens can use offshore jurisdictions for tax advantages that deny additional revenue to the coffers of onshore jurisdictions.

The Financial Times (FT) this weekend quoted senior tax manager with Arthur Anderson, Tony Cohen, as saying: "Pre-March 1991, trusts were safe from this regime and effectively offered tax-free roll-up, especially where the big gain has since been realised.

"Now that the rules are extended to these earlier trusts, many may be imported (to the UK), although it still seems that distributions to the beneficiaries are unlikely.'' Inland Revenue has allowed investors a grace period up to April 6 next year to reorganise their affairs, should they desire, in light of the planned changes.

And in an effort to put a stop to UK individuals receiving tax-free capital payments from offshore trusts set up by non-UK individuals, new technical provisions have also been laid out.

The FT said that this change had been flagged in March, and was controversial because of the furore last autumn when it emerged that paymaster-general, Geoffrey Robinson, was a discretionary beneficiary of a Guernsey-based trust with assets of more than 10 million.

TAXES TAX