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Where Taxpayers and Advisers Meet

overseas gift

riccardob
Posts: 93
Joined: Sun May 29, 2011 10:02 am

overseas gift

Postby riccardob » Wed Jun 01, 2011 5:17 pm

I was wondering what the taxation situation would be in the following scenario:

A is domiciled in the uk but has assets abroad ie. bank account. A transfers overseas bank account money to B in same overseas country. B has no connection to the UK but is related to A ie brother. B then sends money to C who is son of A who resides in UK. Overseas country does not tax this sort of transfer or indeed gift to overseas relatives or other people.

Would UK hmrc track this transaction down to A and slam IHT should A die before seven years since the gift to B was made in overseas country?

Many thanks

section 44
Posts: 4468
Joined: Thu Oct 30, 2008 12:47 pm

Re: overseas gift

Postby section 44 » Wed Jun 01, 2011 5:21 pm

If A transfers money to B on condition that B will transfer it to C then A would not be making a gift to B.

maths
Posts: 7905
Joined: Wed Aug 06, 2008 3:25 pm

Re: overseas gift

Postby maths » Wed Jun 01, 2011 5:41 pm

In short, in theory "yes" in practice possibly not.

In practice it would depend upon the amounts involved.

However, on the death of "A" the executors of A's will are under an obligation to track all gifts made within 7 years of death and disclose them; on looking through A's bank account any transfers are likely (ie should be) to be questioned, in particular, if the monies move abroad.

riccardob
Posts: 93
Joined: Sun May 29, 2011 10:02 am

Re: overseas gift

Postby riccardob » Wed Jun 01, 2011 5:54 pm

In short, in theory "yes" in practice possibly not.

In practice it would depend upon the amounts involved.

However, on the death of "A" the executors of A's will are under an obligation to track all gifts made within 7 years of death and disclose them; on looking through A's bank account any transfers are likely (ie should be) to be questioned, in particular, if the monies move abroad.
the money would be moving from an EU country to a UK account. Does HMRC have powers to search through a third party account?

In theory A could gift B money and then B decides unilaterally to give money to A regardless of hit purposes. I know it is "pulling a fast one" but in practice I would think HMRC would have difficulties in proving that B purposely received money from A in order to benefit C. especially if such transaction was carried out in an overseas jurisdiction.

riccardob
Posts: 93
Joined: Sun May 29, 2011 10:02 am

Re: overseas gift

Postby riccardob » Wed Jun 01, 2011 5:56 pm

In short, in theory "yes" in practice possibly not.

In practice it would depend upon the amounts involved.

However, on the death of "A" the executors of A's will are under an obligation to track all gifts made within 7 years of death and disclose them; on looking through A's bank account any transfers are likely (ie should be) to be questioned, in particular, if the monies move abroad.
I'll rephrase my post as:

the money would be moving from an EU country to a UK account. Does HMRC have powers to search through a third party account?

In theory A could gift B money and then B decides unilaterally to give money to C regardless of hit purposes. I know it is "pulling a fast one" but in practice I would think HMRC would have difficulties in proving that B purposely received money from A in order to benefit C. especially if such transaction was carried out in an overseas jurisdiction.

riccardob
Posts: 93
Joined: Sun May 29, 2011 10:02 am

Re: overseas gift

Postby riccardob » Wed Jun 01, 2011 5:58 pm

In short, in theory "yes" in practice possibly not.

In practice it would depend upon the amounts involved.

However, on the death of "A" the executors of A's will are under an obligation to track all gifts made within 7 years of death and disclose them; on looking through A's bank account any transfers are likely (ie should be) to be questioned, in particular, if the monies move abroad.
I'll rephrase my post as:

the money would be moving from an EU country to a UK account. A has account in EU country not UK and so does B.

Does HMRC have powers to search through a third party account ie. B in another country?

In theory A could gift B money and then B decides unilaterally to give money to C regardless of hit purposes. I know it is "pulling a fast one" but in practice I would think HMRC would have difficulties in proving that B purposely received money from A in order to benefit C. especially if such transaction was carried out in an overseas jurisdiction.

maths
Posts: 7905
Joined: Wed Aug 06, 2008 3:25 pm

Re: overseas gift

Postby maths » Wed Jun 01, 2011 6:21 pm

Bottom line, is that onus of proof is on taxpayer/executors not HMRC.

Do not underestimate HMRC.


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