Personal tax Issues

Our Client – a high-net worth individual, UK resident, but Russian domicile, 63 years old, contacted us in relation to HMRC regarding his remittances into the UK.

This Client earns his income outside UK from the construction projects in Russian Federation, but also has a growing business in the UK that requires funding. That funding was provided through the offshore affiliated corporate structures, his personal savings and profits of his Russian business transferred into the UK.

In the previous year the Client purchased a new house in London using his savings and Director’s loan repayment from his UK business.

After filling self-assessment, that included a Business Investment relief, this Client received an audit inquiry from HMRC requesting him to provide the details of his foreign income, all UK accounts statements and details of all his living expenses in the UK and funds used to pay for the house.

Our experts have been engaged at a later stage of the process where the Client has already received a memorandum from his tax advisor that identified a number of taxable remittances in the previous years that were transferred by the Client into the UK from the offshore affiliated companies to fund his UK business and were not included in his UK self-assessment returns while the business investment relief in the last return has failed due to the repayment of the Director’s loans used to purchase a house.

Working together with the Leading UK Accountancy Firm Saffery Champness we made a detailed analysis and review of all the offshore affiliated companies and trust structures connected to the Client that made remittances into the UK.

Based on our review we identified that for one of the foreign trusts the Client can be considered only as a nominee, but not a beneficiary where the taxable remittances were made for the benefit of the other individuals resulting in the conflict of interests between our Client and his business partners.

We advised our Client on the documentation and supported him on the negotiation strategy with his business partners to ensure that the transfers made by according trust structure would not be treated as taxable remittances for our Client.

As a part of our work, we developed a disclosure strategy and identified several other specific tax reliefs that were available for our client to reduce his UK tax liability resulting from the disclosure.

Working with the client our experts prepared a detailed report where we analysed all the taxable remittances into the UK that should be disclosed to HMRC as well as potential relief significantly reducing the exposure of the worst-case scenario outcome initially identified by his tax advisor.

Our client, a tax resident of the UK, an influential former businessman from Kazakhstan, aged 55, contacted us for assistance in assets restructuring in order to enable tax-efficient investment activities in the UK and Switzerland, subject to proper assets protection against raiding and confiscation actions of state and private structures of the state.

Since his departure from his home country and up until now, the client has been implementing a range of measures to protect his assets and reputation in his home country.

We prepared recommendations, involving leading lawyers from Charles Russell Speechlys, one of the largest law firms in the UK. The report included a strategy plan for restructuring all client’s assets, including his personal funds and funds on company accounts utilising trust law arrangements, tax advice, taking into consideration aspects of tax on remittances and inheritance legislation.

As part of the report, a detailed plan was provided with a separate focus on the tax implications of setting up a Family Office in the UK and an offshore trust.

Our client, a UK tax resident, not UK domiciled, uses the Remittance basis of taxation.

Client contacted us for further advice with regards to confirming his tax advisor's opinion on a personal property purchase transaction in the UK using his own and loaned funds from a Swiss bank.

During our research, we, along with our partners at Saffery Champness examined the client's accounts to identify a 'clean capital' and the presence of any income or capital gains on his account creating tax consequences for the remittances of these funds from the UK under mixed account rules.

As a result, we prepared proposals for the most tax-efficient funding options for the client's transaction and analysed the tax implications.