TalkTax

The recent decision in Newmarket Trustees Limited v CIR is a timely reminder of the risks inherent in the appointment of an assetless corporate trustee.  Newmarket Trustees Limited is the trustee for a number of trusts, one of which (the Southern Lights Trust) has substantial unsatisfied tax obligations.  Newmarket Trustees Limited acknowledged its liability for the tax obligations (about which it had been unaware when it accepted the appointment as trustee) but sought to have a statutory demand set aside on grounds that included the disruption to other trusts if the trustee was liquidated and the trustee’s lack of involvement in the day to day management of the debtor trust.  Declining the application the Court was critical of the trustee’s failure to meet its obligations as a trustee and the absence of any information regarding the Southern Lights Trust’s financial position. 

Although it could be hoped that this case can be limited to its facts, it would be interesting to hear readers’ views on whether the practice of using a single corporate trustee company for multiple trustee appointments is still common .