HMRC have issued another list of Frequently Asked Questions. Many of these questions and answers are entirely straightforward and unremarkable, but the clarification of some points is extremely helpful.
HMRC confirm that a valid alienation of income, even to a relevant person, can be made in 2008/09 and will not be taxable even if remitted to the United Kingdom, providing the relevant income or gains arose prior to 6 April 2008. (This is particularly helpful, as it is contrary to other views that have previously been expressed – for example, in the guidance note issued last month by the Tax Faculty).
HMRC confirm that they are introducing a form on which trustees of nonresident trusts may make a rebasing election. The earliest deadline for trustees to make such an election will be 31 January 2010 – which will apply when a capital payment (i.e., a benefit of any kind) has been made to a UK resident beneficiary in 2008/09.
As far as offshore mortgages are concerned, a number of uncertainties have arisen relating to the transitional provisions for mortgages that existed as of 6 April 2008 and that were used to acquire UK property. Any foreign income used to discharge the mortgage or the interest since 5 April 2008 will be treated as a remittance – unless the grandfathering provisions apply; that is to say the terms of the loan has not been varied, there has been no further advance and the identity of the property has not changed. However, in situations in which a further advance has been made, the advance will not disqualify the whole loan from the benefit of the transitional provisions. The payment of interest on the part of the loan received before 12 March will continue to not be regarded as a remittance.