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I am a non-dom, resident in the UK and am taxed according to

Resolved Question:

I am a non-dom, resident in the UK and am taxed according to the remittance basis. I keep an offshore account. We are in the process of purchasing property in the UK. The deposit will be paid by my father-in-law (UK citizen, resident of the UK) from the proceeds of the sale of his UK home. There is now a minor delay in his sale and we need a short term bridge loan to pay the deposit and exchange contracts on the house we are purchasing. The loan will be provided by a friend from an offshore account to my offshore account, and in turn I will wire the funds to the seller in our property deal.

Am I correct in understanding that the full value of the loan would be a remittance even though it will be repaid within 30-60 days?

My father-in-law will be living in the house with us when we buy it and the proceeds of his house will be used to repay the loan. Would it make a difference if he was the borrower?

Thank you.
Submitted: 1 year ago.
Category: UK Tax
Expert:  Sam replied 1 year ago.

Hi

 

Thanks for your question


Can I ask

1) if you have money in your offshore account why are you borrowing from a friend?

2) Will you pay your friend back once your father in laws house has been sold?

3) Why dos your friend not loan your father in law the money direct

4) Why does this loan need to go through your offshore account ?

Rather than paid direct to a UK bank account?

 

Thanks


Sam

Customer: replied 1 year ago.

Hi Sam,


 


1. I have insufficient funds in my offshore account (or in any account).


2. Yes, we will immediately repay with proceeds.


3. He could loan to him directly but it is indirectly for my benefit (does that make a difference)?


4. It does not need to go through my offshore account.


 


Thanks!


 


Best,


 


Chris

Expert:  Sam replied 1 year ago.

Hi Chris

 

Thanks for your responses

 

You are making this far too complicated, which will lead HMRC to argue that you are drawing from your own capital to remit into the UK thereby creating a tax liability (inspite of how short a time this money remains in the UK and for what purpose its for and that your father in law is involved in the new house purchase)

Whether the money is loaned to you directly (or to your father) just make sure that appropriate paperwork is drawn up stating how much has been loaned, and what terms for the repayment (I,e by when and with or without interest) and how it will be repaid (from the sale of father in laws property)

Also make sure this money is remitted to the UK directly from your friend, and just alert your UK bank account of its expected arrival, as they will need to carry out checks on the money arriving into the UK (so the paperwork detailing the short term loan letter will back up the position)

 

That way

1) You will keep the bank happy, with their laws and checks on large sums coming into the UK

2) Remain free of tax on this loan, as these are not liable to tax

30 provide the full information of why this money is coming into the UK and not implicate you with your own capital, which currently is not liable to UK tax under the remittance basis.

 

 

Do feel free to ask any follow up questions, but it would be appreciated if you could rate the level of service provided, and feedback and/or a bonus are always most welcome.

 

Thanks


Sam

 

 

Sam, Accountant
Category: UK Tax
Satisfied Customers: 12891
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Capital Gains, CIS ask for Sam Tax
Sam and other UK Tax Specialists are ready to help you
Customer: replied 1 year ago.

Very helpful. Thanks for your quick response!

Expert:  Sam replied 1 year ago.

Hi Chris

 

You are very welcome

 

Please do not forget to rate the level of service (this ensures Just Answer pays me !)

 

Thanks

 

Sam

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