Case: Non-domiciled investment banker loses appeal against £675,000 tax bill over director loans

Non-domiciled investment banker loses appeal against £675,000 tax bill over director loans

Mr

The investment was intended to qualify for business investment relief, making it exempt from tax. Business Investment Relief (BIR) is a potentially valuable tax relief for UK taxpayers, particularly non-doms, who have used or are currently using the remittance basis. The BIR allows these Remittance Basis Users (RBU) to invest their income and gains offshore in the UK without incurring taxes on such remittances. In this particular case, however, complications arose when he used a director’s loan account for personal expenses. A director’s loan is money taken out of your company’s accounts that is not considered salary, dividends or legitimate expenses.

Mr HMRC considered this to be “value extraction” in breach of the funds transfer basis. As a result, HMRC refused business investment relief for the full £1.5 million and issued a tax bill of £675,000.

In response to the tax bill, Mr. It was claimed that the loan granted to the director was made in the ordinary course of business. HMRC argued that any extraction of value, not just net, constituted a breach.

A tribunal judge sided with HMRC, ruling that the legislation did not specify net value extraction. The court found that Mr. Despite the client’s claims that he had followed legal advice, the appeal was dismissed and he was held responsible for the full tax bill of £675,000.