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Money transferred by Friend

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Hi,

This query is on behalf of my friend lets say A. His Friend lets say B, wants to transfer 12k to A's personal bank account from his personal bank account with the reference of his name.  This is because A's father(living in foreign country) wants to send money to A and to save foreign money transfer charges and FX rates, A's Father can transfer money to B's Father(also living in same foreigh country) who needs money and subsequently, B would tranfer money to A's bank account in UK. A and B are UK residents.  Would it be ok to do this without any tax implecations ?

Thanks,

Replies (20)

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By jonharris999
08th Apr 2021 14:56

Yes. Although this is what TransferWise is for.

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Replying to jonharris999:
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By vihasha
08th Apr 2021 15:02

jonharris999 wrote:

Yes. Although this is what TransferWise is for.

Thanks for you reply. The transferwise charges around 2% in the foreign country where A's father lives.
Should my friend A get any document from B ? or its not needed because the money is going to come from B's personal account ?

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By vihasha
08th Apr 2021 15:17

Just to add on this, A is Employed with the multinational company. B runs some local business. Thanks

*This comment has been edited.*

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By Tax Dragon
08th Apr 2021 15:24

Naturally, your friend A's father's friend C, and A's friend B's father's friend D, should post similar questions on Aweb.co.foreigncountry to make sure the answer is "yes" there too. (I'm taking Jon's UK-only answer at face value, neither endorsing nor gainsaying it.)

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Replying to Tax Dragon:
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By Tax Dragon
08th Apr 2021 15:27

Ironically, I was editing my reply to remove a 'controversial' reference to information perhaps having been removed from the OP, and which Jon had seen and I hadn't, when a post appeared including more information.

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Replying to Tax Dragon:
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By vihasha
08th Apr 2021 15:34

Tax Dragon wrote:

Ironically, I was editing my reply to remove a 'controversial' reference to information perhaps having been removed from the OP, and which Jon had seen and I hadn't, when a post appeared including more information.

Thank you for your information. A's Father(C) and B's Father(D) has covered their part in foreign country. The term of the transfer for them is a Cash.

The UK transaction will happen via bank transfer(personal to personal bank account).

Should my friend A take any documentation from his friend B? and if so, what would it be look like ?

Thank you,

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Replying to vihasha:
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By frankfx
08th Apr 2021 15:41

"Should my friend A take any documentation from his friend B? and if so, what would it be look like ?"

Ask the receiving bank!

Therein is the acid test.

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Replying to frankfx:
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By vihasha
08th Apr 2021 15:47

frankfx wrote:

"Should my friend A take any documentation from his friend B? and if so, what would it be look like ?"

Ask the receiving bank!

Therein is the acid test.

Sorry I might not have made my self very clear. I was asking should my Friend A get something in written from Friend B, following the bank transaction in UK ?
Thanks,

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By lesley.barnes
08th Apr 2021 15:31

My concern wouldn't be tax, my concern would be whether E who works in the fraud department of A's bank thinks this may be money laudering and freezes A's bank account whilst they investigate.

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Replying to lesley.barnes:
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By vihasha
08th Apr 2021 15:39

lesley.barnes wrote:

My concern wouldn't be tax, my concern would be whether E who works in the fraud department of A's bank thinks this may be money laudering and freezes A's bank account whilst they investigate.

Thanks for your reply. Do you think transferring one of - 12k to another personal account would trigger money laundering investigation ? their(Friend A and B) accounts are pretty clean. there is no Cash transaction etc.

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By lesley.barnes
08th Apr 2021 15:50

I honestly don't know what would trigger on the bank systems software its something to consider. It may well put up a red flag if this was an usual transaction in this individuals account.

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By Martin B
08th Apr 2021 16:54

Pay the 2% and do it propertly and sleep at night.

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Replying to Martin B:
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By vihasha
08th Apr 2021 16:57

Martin B wrote:

Pay the 2% and do it propertly and sleep at night.

Thanks for your reply Martin. Apart from money laundering issue, Do you think there would be any UK Tax to pay on the receiving money ?

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Replying to vihasha:
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By Hugo Fair
08th Apr 2021 17:15

The reason you're not getting 'helpful' replies is because this is a crazy idea to contemplate putting into action.

No (there is no immediate "UK tax to pay on the receiving money" IF the transfer is a gift (which is debatable as it comes with pre-conditions) AND if certain other things don't happen (like the donor dying within 7 years of the gift, etc).

But there are so many non-Tax reasons for not going this route ... mainly related to the things that can go wrong with word-of-mouth/non-contractual agreements - but also to do with nosey banks over-zealously enforcing their AML rules. [FWIW any cash over £9,999 will always trigger a 'procedure', less in many cases].

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Replying to Hugo Fair:
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By vihasha
08th Apr 2021 17:26

Hugo Fair wrote:

The reason you're not getting 'helpful' replies is because this is a crazy idea to contemplate putting into action.

No (there is no immediate "UK tax to pay on the receiving money" IF the transfer is a gift (which is debatable as it comes with pre-conditions) AND if certain other things don't happen (like the donor dying within 7 years of the gift, etc).

But there are so many non-Tax reasons for not going this route ... mainly related to the things that can go wrong with word-of-mouth/non-contractual agreements - but also to do with nosey banks over-zealously enforcing their AML rules. [FWIW any cash over £9,999 will always trigger a 'procedure', less in many cases].

Thank you for your reply. I think it's complicated. I will tell my Friend not to do it.

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Replying to vihasha:
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By Tax Dragon
08th Apr 2021 17:48

vihasha wrote:

Thank you for your reply. I think it's complicated. I will tell my Friend not to do it.

Your friend who was going to get £12k for doing nothing? (Or did s/he in fact have to do something that you haven't told us about?)

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Replying to Tax Dragon:
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By vihasha
08th Apr 2021 22:47

Tax Dragon wrote:

vihasha wrote:

Thank you for your reply. I think it's complicated. I will tell my Friend not to do it.

Your friend who was going to get £12k for doing nothing? (Or did s/he in fact have to do something that you haven't told us about?)

Hi, My friend A has not/does not have to do anything at all. His father is transferring money to B's father in foreign country and in return, B would transfer the equivalent amount in GBP from his personal account to A's personal account with the transaction reference of A's choice.

Both are good friends and not at all connected with any kind of business. the whole point of doing this is to save FX charges and get better rates for both. both side they can save 2% on fees and around 1.5-2% on FX rates. so in total they would be able to save 5-7% of the whole amount. That is a good saving and that is why I asked the question above.

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By bernard michael
09th Apr 2021 11:36

I'm surprised they start as high as £12k. These schemes (nearly spelled it scams) usually start a very low figure to test the water

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Replying to bernard michael:
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By vihasha
09th Apr 2021 11:43

bernard michael wrote:

I'm surprised they start as high as £12k. These schemes (nearly spelled it scams) usually start a very low figure to test the water

Hi,

I am sorry I did not understand your comment. could you please explain in bit more detail ?

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Danny Kent
By Viciuno
09th Apr 2021 18:08

If you really want to save fees you could send using some form of crypto. Nearly instantaneous depending which coin you use. Make sure that whatever country you are sending to has a liquid market for it. Don't want to move it all and then not be able to sell it at the other end!

Something like litecoin might be a good call - low transaction fees and fast. All depends on your actual situation.

https://www.coinbase.com/international

If you use a stable coin they are linked to an actual currency so you wont see huge swings in the value of the coin based on demand. (litecoin isn't one btw but its liquid)

Bank may query transactions to and from the exchange/wallet - can't comment on that. Some countries frown upon this though so not for everyone.

This will keep transaction from A-B (or A to D in your case) without any middlemen muddying the waters (or do we now say middlepeople?)

Do your own research before doing this though! And be careful to only purchase from reputable exchanges. If you go coinbase sign up for the pro version (lower fees).

BTW - look for a referral link from someone, may go someway to cover your costs.

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