Non-dom tax

A client has been living temporarily in the UK since late 2007. Currently residing in the UK on “limited leave to remain residence permit” until January 2013. Position after January 2013 unclear, expects to be allowed to remain in the UK and may qualify for full UK citizenship.

Resident and Ordinarily Resident in the UK for tax purposes, but not domiciled in the UK, domicile still overseas.

Prior to coming to the UK (i.e. before becoming tax resident in the UK) part of the proceeds resulting from the sale of some shares were deposited in a personal account in the Channel Islands.

Some the funds deposited in the Channel Islands have been lent to UK businesses set up by the client after becoming tax resident, who is also a director and part shareholder in the companies.

QUESTIONS

1.      Is there a tax implication in a non-domiciled tax resident loaning a UK based company money sourced from offshore funds?

2.      For tax purposes – is the loan deemed a UK based asset or an offshore asset?

3.      If the client transferred the loan from his personal capacity into an offshore trust (set up prior to becoming tax resident in the UK) – will this incur    an IHT tax liability?