HMRC to review their position on remittances

Representatives from CIOT recently attended a meeting with HMRC to discuss the issue of remittances of loan monies secured against collateral representing foreign income or gains. HMRC’s published view is that if the full amount of such a loan is brought into the UK, the full value of the collateral is deemed to have been remitted and taxed accordingly. E.g. if a £10,000 loan were secured against collateral worth £1million, bringing that £10,000 into the UK would attract a charge based upon the £1million collateral. Anything less than the full loan brought into the UK will be deemed as a remittance capped at the level of that amount actually remitted; in that same example, if only £9,999 of the £10,000 loan were remitted into the UK, the charge would be based upon that £9,999.

CIOT’s view is that the basis of an income tax charge should be capped at the level of monies actually remitted. Following this meeting, HMRC have agreed to review their position.

Another matter discussed at the same meeting, and in light of submissions made by HMRC at the First Tier Tribunal in the case of Sehgal¹, was whether remittances to the UK made in pursuance of a divorce settlement are chargeable. A letter received by CIOT from HMRC in 2012 (see below, along with original query letter) confirmed that payments made in the scenario outlined in the letter did not involve a taxable remittance. However, HMRC now say that whether or not property has been received or used in the UK as part of a particular transaction will depend on the specific facts of the case. 

HMRC agreed that further discussions may be required on this matter.

Section 809L Income Tax Act 2007 - CIOT letter
Section 809L Income Tax Act 2007 - HMRC response

^{1. Raj Sehgal and Sanjeev Mehan v HMRC [2022] UKFTT 00312 (TC)}