No strings loan from friend abroad - Implications?
Discussion
Apologies if this is a silly question, but...
If someone (reputable & wealthy) who lives elsewhere in Europe were to transfer a no obligation loan (no interest, no time frame for repayment, etc) of say between £25k and 50k, in to a friends bank account here in the UK, would the recipient encounter any issues/problems with "the authorities"?
It would more than likely go in to a business account (small business, not VAT registered) before being transferred in to a personal account, and would come with a covering letter from the sender outlining everything just in case any questions were asked.
Answers/info from anyone in the know would be much appreciated.
Thanks
If someone (reputable & wealthy) who lives elsewhere in Europe were to transfer a no obligation loan (no interest, no time frame for repayment, etc) of say between £25k and 50k, in to a friends bank account here in the UK, would the recipient encounter any issues/problems with "the authorities"?
It would more than likely go in to a business account (small business, not VAT registered) before being transferred in to a personal account, and would come with a covering letter from the sender outlining everything just in case any questions were asked.
Answers/info from anyone in the know would be much appreciated.
Thanks
Legally there is no issue and he can 'gift' or loan money to you tax free. If he were to die in the next 7 years there could be either IHT issues or a need to repay the loan.
If you are self-employed and were selected for either a tax or VAT enquiry, this would very probably be queried but providing you could privide evidence of the source of these funds (and hopefully your friend would co-operate in this) then again there 'should' be no problems.
I suppose it is slightly possible it may ring some MLR alarm bells at the bank, though as a one off I doubt it.
If you are self-employed and were selected for either a tax or VAT enquiry, this would very probably be queried but providing you could privide evidence of the source of these funds (and hopefully your friend would co-operate in this) then again there 'should' be no problems.
I suppose it is slightly possible it may ring some MLR alarm bells at the bank, though as a one off I doubt it.
If the guy dies within 7 years then it would need to be decided if the money was a gift or a loan. If a loan presumably the beneficiaries would want this to be repaid or it would be have to be re-negotiated.
If it were deemed a gift, then it would fall within the estate and IHT would fall due on the sum (on a sliding scale through the 7 years from the date the gift was made to the date of death). Possibly the beneficiaries would look to the OP to pay the tax falling due on the money gifted to him, though I believe it would be due from the estate.
If it were deemed a gift, then it would fall within the estate and IHT would fall due on the sum (on a sliding scale through the 7 years from the date the gift was made to the date of death). Possibly the beneficiaries would look to the OP to pay the tax falling due on the money gifted to him, though I believe it would be due from the estate.
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