With effect from 4 August 2014, HMRC changed, without notice,
their stated position with respect to the treatment of commercial
loans secured by foreign income or gains. From this point on, money
brought to or used in the UK under a loan facility secured by
foreign income or gains is to be treated as a taxable remittance in
addition to any service payments. Prior to this, HMRC guidance was
that only repayments or payments to service the loan could be
treated as taxable “remittances” if made out of foreign
income / or gains.
HMRC contend that the change to the guidance is not retroactive as
resident non-doms who relied upon it have until April 2016
effectively to unwind their present arrangements and, if necessary
enter into new arrangements. Representatives of various
professional bodies met with HMRC/HMT officials on 11 September to
discuss the rationale for the change and the potential difficulties
that would be suffered by numerous individuals who had relied upon
the guidance (as it turns out) to their detriment.
HMRC have indicated an intention to issue FAQs to address technical
issues arising from foreign income and gains being used as
collateral and the impact of the change. HMRC invite advisors who
have clients who are encountering any real difficulty as a result
of this change to let them know.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.