Remittance

Remittance

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I have a Japanese client who although she has been UK resident for 30 years retains Japanese domicile. She has approximately £150K on deposit in a Jersey bank which has been there for 15 years plus. RBC not relevant as the client has had below £2,000 worth of overseas deposit interest.

She now wishes to remit the majority of the £150K to assist her only child who is UK resident with the purchase of a property here. 

She has no record of how the capital accrued except to say it was from a mixture of earnings and savings in Japan before she became UK resident, gifts from family over the years and some earnings in Japan which she paid Japanese tax on during the time she was UK resident.

Any thoughts as to how to approach the UK tax position?

Replies (10)

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By johngroganjga
28th Sep 2015 16:14

Not clear from what you say what UK tax position has to be approached.

You say client has not opted to be taxed on the remittance basis. So client has been taxable in the UK on worldwide income, including interest on the Jersey deposit you mention.

So why are you asking about the tax implications of remitting the Jersey funds to the UK, when you say yourself that the remittance basis does not apply?

Do you mean that client has not been declaring interest on the Jersey deposit?

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Replying to lionofludesch:
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By adambl
28th Sep 2015 16:59

Thanks for your reply. What I'm concerned about is the £150K that has been held offshore for many years and which has never been remitted here until now.

The client has not been declaring the Jersey interest as it has not been remitted here and since the RBC charge has been in force since 2012 it has been below £2,000 so the RBC is not applicable.

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By Montrose
28th Sep 2015 16:19

Gift to child

Assuming child is adult, a simple direct  gift offshore to  an offshore bank opened by child will not be a remiittance by either of them. It will be  PET for IHT but is within nil rate band, so if no other transfers of value within previous seven years no risk of a chrarge arising on the gift  to child on donor'sdeath within the next 7 years

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By King_Maker
28th Sep 2015 16:21

Deemed Domicile?

Excluded Property Trust(s)?

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By johngroganjga
28th Sep 2015 17:12

Still not clear

But should your client not have been declaring the Jersey interest, as she did not opt for the remittance basis to apply and was therefore taxable on her worldwide income, remitted or not?

Or am I missing something?

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Replying to Michael B Bennett:
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By adambl
28th Sep 2015 17:44

Apologies, perhaps it me that's not making myself clear. The remittance basis applies automatically to my client but as the Jersey interest is less than £2,000 per annum and it is not remitted to the UK the RBC does not apply to her.

The thing I'm more concerned about is how the £150K would be treated as my client has no real idea or record of the origination of the funds. On the basis that she remits the whole amount here she would declare and pay tax on the Jersey interest but how would I treat the rest of the £150K? If HMRC query the issue would they insist on proof of where the funds originated from even if it was 15 years ago plus and if in doubt treat it as income or capital gain?

 

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By johngroganjga
29th Sep 2015 08:35

But surely these days you have to pay the remittance basis charge for the remittance basis to apply?  How can someone claim to be taxed on the remittance basis without paying the charge? What am I missing?

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By IslingtonAccountant
29th Sep 2015 09:52

If you fle on the remittance

If you file on the remittance basis and have less than £2,000 unremitted foreign income/gains in a year you do not need to pay the RBC for that year, and you retain your personal allowance & annual exemption.

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By johngroganjga
29th Sep 2015 10:12

Ah so there is a de minimis threshold below which the arrangements I thought I was aware of do not apply? You live and learn.

So if your unremitted foreign income is £2,001 or more you either pay UK tax on it, or pay the RBC?

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By IslingtonAccountant
29th Sep 2015 10:09

Assuming that the usual condtion regarding being considered long-term resident is met, yes.

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