Selling small inherited property abroad (Russia) and bringing money into UK

Dazed_and_confused_too

Hi,
I’m looking for advice on multiple topics as follows:

My father (a Russian citizen who lived all his life in Russia, with no assets of any sort in the UK) passed 5 months ago and I am about to inherit a small flat. The total value of the flat is an equivalent of around £70,000– £75,000.
As soon as I inherit, I will sell this flat (to a family of my close friends in Russia) and want to transfer the money into the UK (most likely via a bank transfer into my account). However, there are “unusual” complications in my story.

1) The buyer wants to transfer half of the sum via a UK business bank account. The buyer is an employee of a small Russian company, which has a business bank account in the UK. The buyer intends to get an intra-company loan (basically to borrow directly from their boss) and pay about half of the sum via their company’s UK bank account = approx. £35,000.

2) Then they would pay me the remainder (£35,000) of the sum in roubles (cash or a bank transfer into my Russian account), which, in turn, I intend to transfer into my UK bank account as well.

So far I’ve read that according to the UK laws “there’s normally no Inheritance Tax to pay if… the value of your estate is below the £325,000 threshold”, which my flat certainly is.

Now, moving on to my questions:
1) Is the UK inheritance tax law applicable in my case? (I.e. I don’t have to pay any inheritance tax in the UK).

2) Will I have problems with the HMRC if £35,000 is transferred via a UK business bank account? How can I prove that this money is a part of my “inheritance”, namely a proportion of the money I will have got by selling the flat.

3) It there is no straight forward answer, who (what type of a professional) should I address for an advice in the UK?

Thank you in advance!

AnotherJoe

I don't think you'll face any of the issues you mention. I think you may more likely face money laundering issues.
So, to start, how many bank accounts do you have? Because I would get the money sent to a non main bank account so that if the bank arbitrarily freeze your account it doens5 mess up normal life in terms of salary payments in and bills out.
Second I would let the bank know of your incoming payments before they arrive.
Third get together any documentation you will have about the sale to show to the bank and HMRC if asked.
There are no tax implications for you in the U.K. no idea about Russia.

Dazed_and_confused_too

Thank you, AnotherJoe!

A very good point re. sending the money into a non-main bank account.
At the moment I've got my main bank account (for salary, own expenses etc.) and a joint bank account (which me and my other half use to pay our joint bills mostly) in the same bank. But, following your advice, it looks that I'd better open a completely different account in another bank to transfer the money in question into...

AnotherJoe

Dazed_and_confused_too wrote: »

Thank you, AnotherJoe!

A very good point re. sending the money into a non-main bank account.
At the moment I've got my main bank account (for salary, own expenses etc.) and a joint bank account (which me and my other half use to pay our joint bills mostly) in the same bank. But, following your advice, it looks that I'd better open a completely different account in another bank to transfer the money in question into...

The only issue with that is that it looks even more suspicious openinga new account and immediately transferring £70k in from Russia,

Dazed_and_confused_too

Hmm.. Fair point, AnotherJoe!
I'll have to think about this / options. Will go to my bank and talk to them first, I suppose.

vacheron

Can't comment on the business element, but regarding the personal bank transfer:

We were lucky enough to be gifted 1.5 million Rubles as proceeds from a flat sale when we were visiting Russia in 2013 this was completely unexpected and was handed to us in cash 2 days before we were due to leave, which certainly looked impressive but was hardly safe or practical!

At that time, customs wouldn't allow cash exports greater than the equivalent of $10,000 from Russia, so we went to the bank and deposited the cash and and made a series of transfers to our UK account (each transfer was also limited to the equivalent of $10,000 and cost about 1,000 rubles per transaction) we needed to make 5 transactions in total.

Everything arrived in our account in the UK within 2 days and no alarm bells seemed to be raised. This was only our experience though and was a few years ago, but it turned out to be less trouble than I had anticipated!

Dazed_and_confused_too

Thanks a lot for sharing your experience, Vacheron.
If you don't mind me asking, so the dollar equivalent for the whole amount transferred was approximately $50,000, right?

(I heard though that in the recent years it got harder to take money out of Russia, and maybe the UK scrutinise transfers from Russia more closely nowadays, due to the overall political situation...)

vacheron

Dazed_and_confused_too wrote: »

Thanks a lot for sharing your experience, Vacheron.
If you don't mind me asking, so the dollar equivalent for the whole amount transferred was approximately $50,000, right?

(I heard though that in the recent years it got harder to take money out of Russia, and maybe the UK scrutinise transfers from Russia more closely nowadays, due to the overall political situation...)

Correct, with the exchange rates at the time it worked out at about £31,000 or $48,000 (we were lucky enough to receive this when rates were about 45 rubles to the £, less than two years later that had almost doubled)!

I'm not sure the political situation is "that" much different now than it was back then, however the sanctions etc. could possibly have resulted in some tightening of the rules.