Cleansing Income/Capital

[Yiannis17]

Morning

Once an individual is in the UK, who is UK resident, but Not UK Dom, is it difficult to prove that monies brought in from Europe is capital? I have a chap who has transferred 30K in some time after arriving.

And what would the position be with his tax return?

Thank you

[AGoodman]

Do you mean the client is unsure himself or how do you prove it to HMRC? It is all fact specific so difficult to be generic.

[hendersontax]

The individual will need to self-assess whether or not he has made a taxable remittance, there is no need to prove it unless HMRC open an enquiry. If the money was transferred from a bank account which was not a mixed fund and contained nothing other than pre-arrival capital (for example, at the point of remittance the account was 'clean' and had never been credited with income or gains taxable on remittance, such as interest earned after arrival) then there should be no tax implications of the transfer and no need to declare it. Otherwise, if the account was a mixed fund, there are strict rules which deem what income or gains has been remitted first - see https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm35240.