Remitting Income

[shawn_phade@yahoo.co]

Hello,

Person A and Person B work in London. Both are not domiciled in the UK.

Both have offshore bank accounts which some income is paid into. I know if you withdrew this income onshore you would have to pay tax on it.

If Person A transferred money from their offshore account to Person B's offshore account - is there anything illegal about Person B writing out a cheque and giving it to Person A to cash onshore as a personal loan?

Does any formal documentation need to be kept or is it suitable just to say it was a personal loan if ever queried?

Thanks.

[Lambs]

Hmmm. I think that the Inland Revenue would be very, very interested in the matter, if they were to be appraised of the full sequence of events!

Broadly speaking, there are some quite well known legal cases which established a basic principle of distilling a chain of events into a simplified transaction.

I am not sure that the Revenue would even have to apply that principle in this case, to find a taxable element to your proposition.

I would add that the legislation provides for taxing overseas funds applied to settle debts which arise in the UK, as a remittance.

[Taxbar]

DIY remittance planning has been discussed before.

Non-Domiciled tax planning has many opportunities,but it is the realm of specialists in this area. Many general tax practitioners come to me every year with client problems, because they have misunderstood the issues of the remittance basis and the exact scope of the lawful loopholes.

Your idea is flawed under both the 'conduit' approach and the 'reciprocity' of gift approach.

If you want to effect tax-free remittances let an expert guide you, otherwise you are merely creating a tax liability whose cost will far exceed any professional fees you may pay to effect a tax-free remittance.

Daniel M Feingold
Barrister-at-law (NP)
Strategic Tax Planning
International & UK Tax Consultants
Treen House
72 Park Road,
Prestwich,Manchester M25 OFA
England. UK
E-mail: info@stratax.co.uk