HM Revenue and Customs (HMRC)
announcement on 4 August 2014
gave notice of the withdrawal of concessional remittance basis
treatment of foreign income and gains used as collateral for certain
loans brought into or used in the UK. This brief updates HMRC’s position
on arrangements for loans brought into or used in the UK before 4
Who needs to read this?
Anyone using the remittance basis who used foreign income and
gains as collateral for a loan brought into or used in the UK before 4
On 4 August 2014, HMRC
withdrew its concessional practice published in 2010 in HMRC’s guidance
manual RDRM33170 as it was seeing large numbers of
arrangements not considered to be within the intended scope of the
notice published on 4 August 2014 requested anyone using the remittance
basis who used foreign income and gains as collateral for a loan
brought into or used in the UK before that date to notify HMRC where they
had not declared a remittance. The notice stated HMRC’s intention
to assess remittances for loan arrangements that used the concession if
a written undertaking was not provided by 31 December 2015 that foreign
income and gains collateral would be either repaid or replaced by
non-foreign income and gains collateral before 5 April 2016, or the
undertaking was not honoured.
The purpose of the announcement on 4 August 2014 was to stop
the concession being used in a way that was not intended, and to bring
existing arrangements into line with HMRC’s
application of the remittance basis to loan collateral arrangements
going forward from that date.
The transitional period to 5 April 2016 was intended to
provide adequate opportunity to alter all arrangements where the loan
was brought into or used in the UK before 4 August 2014, ensuring there
was no penalty for relying on the concession when the arrangements were
Discussions with representative bodies since the announcement
have brought to light that for some loan arrangements it may be
difficult or impossible to unwind or replace the foreign income or
gains used as collateral.
To ensure the transitional period does not have an unintended
effect, after careful consideration HMRC has decided
it will, with effect from today, not seek to apply the change announced
on 4 August 2014 to arrangements where the loan was brought into or
used in the UK before that date. From today, there is no requirement to
repay or replace foreign income and gains collateral with non-foreign
income and gains collateral before 5 April 2016.
The effect of the withdrawal of the concession is maintained
for arrangements where the loan is brought into or used in the UK on or
after 4 August 2014. This ensures HMRC’s change of
practice operates as intended.
Telephone: 03000 585140
Telephone: 03000 546688