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Where Taxpayers and Advisers Meet

Cash gift from non-UK resident non-UK dom to non-UK resident non-UK dom

Martin314
Posts: 2
Joined: Thu Jan 11, 2018 11:59 pm

Cash gift from non-UK resident non-UK dom to non-UK resident non-UK dom

Postby Martin314 » Fri Jan 12, 2018 7:57 am

My non-UK resident and non-UK dom parent made a cash transfer from his UK bank account to my non-UK bank account in 2009, with me also being a non-UK resident and non-UK dom. The cash was exchanged into Euros in the UK and then left the UK immediately in Euros and was used outside the UK by me to purchase a permanent home outside the UK. The cash was not enjoyed or used or invested in the UK either by the donor or donee. This transfer was a private agreement made outside the UK between a non-UK resident/non-UK dom donor and non-UK resident/non-UK dom donee. I understand the transfer is therefore not subject to any IHT even if my parent died before the 7 year rule?

AGoodman
Posts: 437
Joined: Fri May 16, 2014 3:47 pm

Re: Cash gift from non-UK resident non-UK dom to non-UK resident non-UK dom

Postby AGoodman » Mon Jan 15, 2018 12:21 pm

As your parent was not UK dom or (I assume) deemed dom, the only relevant fact is the location (situs) of the gift your parent made you.

I would ordinarily assume that a gift of cash made from a UK account was a UK situs gift, even if sent abroad, and so subject to the IHT regime - this would make it a PET and chargeable if the donor died within 7 years. Usual nil rate band(s) and rate taper apply.

There is an exemption for foreign currency accounts under s.157 IHTA but that only applies to balances at death (rather than gifts) and they have to be held in an account denominated in a foreign currency.

The position would of course be different if this were not a gift; was that the case?

Was there a particular point that led you to think the transfer was excluded/exempt?

Martin314
Posts: 2
Joined: Thu Jan 11, 2018 11:59 pm

Re: Cash gift from non-UK resident non-UK dom to non-UK resident non-UK dom

Postby Martin314 » Wed Jan 17, 2018 1:41 pm

Thank you for your reply AGoodman and I confirm that the parent was not deemed dom either. The cash went to a Spanish limited liability company as a loan and I was acting under the instructions of the parent. The Spanish company then made use of the cash buying assets and/or purchases outside the UK (excluded assets). The company then sold the assets and the instructions from my parent were for the company to give me the proceeds (with gain or loss) and consider me the beneficial owner as payment for a UK property registered in my name that was sold in 1993 by the same parent to a third party in the UK and was therefore owed to me by the same parent. Therefore I/we thought the transfer was excluded or exempt at the point where my parent instructed me to keep the proceeds as mine beneficially 100%, irrespective of whether those sale monies were owed to me or not by the parent for the 1993 transaction. I would really appreciate any further comments.


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