Is a transfer of 100k within the UK from a friend taxable?

Voyager2002

As I understand it, your family friend in the UK would transfer 100K into your UK bank account (from his). Meanwhile, your aunt in Iraq would transfer an equivalent amount from her bank account into his Iraqi bank account.

My first suggestion: to avoid possible quarrels, write down and sign exactly what this agreement means in detail. (For example, suppose that some time is required for the transfers and the value of the Iraqi dinar changes: are the amounts of money in each currency fixed, or does the number of dinar change to reflect the new value of 100K pounds at current exchange rates.)

Secondly, you can be sure that both UK banks and the UK tax authorities will be very interested in a transfer this large. The transfer will certainly be held up while the bank ensures that this is not an effort at money-laundering, and you might need to show written agreements about what is going on in order to persuade them to release the funds. As for tax: there is no tax on gifts, but it is unusual to give away such a large sum of money and so HMRC will be very interested in what is going on. Again, documentation (signed agreements) will help to convince them that this is not a taxable transaction.

Your_Hero

govigta wrote: »

I could transfer the amount 10k per month but that would take a very long time. That's why I went into this arrangement with this family friend, because he needs money on the other side and I need money on this side. So technically its an exchange, but would basically appear as a single transfer to me here in the UK.

This is how people launder dirty money.

FOR ALL INTENTS AND PURPOSES - this is like a friend transferring 100k to another friend here in the UK? Is it really that big of a deal? I've had friends transfer me amounts of 2k before.

£2k and £100k is a very big difference.

I know 100k is a lot of money but why would they suspect laundering?

How else do you think criminals clean their money? They do exactly what you said and use "friends" to pass on money.

All too suspicious to me. If many are saying that on the forums, you can bet the banks will be suspecting something's up too.

govigta

@VOYAGER2002

You've understood correctly!

Friend's account - transfers 100k from his British account to mine--the whole Iraq issue was just to give some background to my question.

As for signed agreements - do you mean simply writing down what we've agreed to and the terms and both signing ourselves? Or involving a third party?

Thanks for all your advice, guys. Just wanted to know what to expect. I asked because I'm a British/Swedish citizen who graduated from uni 3 years ago, has worked, and has never had any issues with tax or the law. Just want to make the process as smooth as possible.

@YOURHERO

I agree with all you've said. Just trying to avoid headaches before it's all done, I suppose. Better to know what to expect in terms of questions.

govigta

Cook_County wrote: »

Is the transaction legal in Iraq and local banking, tax and foreign exchange rules? What are the tax effects in Iraq?

Transaction completely legal in Iraq - would just be case of transferring money from one person to another - no tax effects on my end. Just transfer of money over there and he can do with it as he pleases. If he buys a house, for instance, then there will be tax implications, things like the Iraqi equivalent of stamp duty.

sorcerer

You must really trust this friend. Because I am amazed how people who turn out to be friends suddenly turn into totally different people when money gets involved. even though thought you knew them very well. So these days when it comes to money I trust no one.

govigta

sorcerer wrote: »

You must really trust this friend. Because I am amazed how people who turn out to be friends suddenly turn into totally different people when money gets involved. even though thought you knew them very well. So these days when it comes to money I trust no one.

I agree with you. However, there isn't much that can go wrong here - he will transfer the money to me FIRST. Then he will receive an equivalent amount at a later date from my aunt. So not much risk as I get the money.

govigta

Voyager2002 wrote: »

As I understand it, your family friend in the UK would transfer 100K into your UK bank account (from his). Meanwhile, your aunt in Iraq would transfer an equivalent amount from her bank account into his Iraqi bank account.

My first suggestion: to avoid possible quarrels, write down and sign exactly what this agreement means in detail. (For example, suppose that some time is required for the transfers and the value of the Iraqi dinar changes: are the amounts of money in each currency fixed, or does the number of dinar change to reflect the new value of 100K pounds at current exchange rates.)

Secondly, you can be sure that both UK banks and the UK tax authorities will be very interested in a transfer this large. The transfer will certainly be held up while the bank ensures that this is not an effort at money-laundering, and you might need to show written agreements about what is going on in order to persuade them to release the funds. As for tax: there is no tax on gifts, but it is unusual to give away such a large sum of money and so HMRC will be very interested in what is going on. Again, documentation (signed agreements) will help to convince them that this is not a taxable transaction.

As for signed agreements - do you mean simply writing down what we've agreed to and the terms and both signing ourselves? Or involving a third party?

Thrugelmir

govigta wrote: »

As for signed agreements - do you mean simply writing down what we've agreed to and the terms and both signing ourselves? Or involving a third party?

If the HMRC become involved then paperwork is a neccessity. As your word won't be sufficient. For a transaction that appears dubious to say the least.

James_B.

Thrugelmir wrote: »

If the HMRC become involved then paperwork is a neccessity. As your word won't be sufficient. For a transaction that appears dubious to say the least.

I will be stunned if it does not launch a laundering investigation. Money being transferred from a country with major terrorism issues, routed through a third party, with a date mismatch to confuse the investigation...

I'd does not just look like money laundering, is is money laundering. It is even being done expressly to avoid the problems of going direct.

Savvy_Sue

govigta wrote: »

I agree with you. However, there isn't much that can go wrong here - he will transfer the money to me FIRST. Then he will receive an equivalent amount at a later date from my aunt. So not much risk as I get the money.

Maybe not much risk to you, but huge risk to him ...