Can I trade in my UK friends trading account from India? What can be the legal and tax issues ?

Thanks4Help

My friend has a stock trading strategy that is working very well in India. He wants to explore it for other countries. We have a close friend in UK who has agreed to open a trading account (ex: in Interactive Broker) and we will lend money to his account and trade. We will take care of the cost and tax obligations of him.

If this experiment works well, we plan to open the global trading account from India which is very very complicated.

What can be the issues here like tax and other legal aspects from India and UK ? I do not have issues with trust, honesty etc of my friend. 

Voyager2002

Your friend must give a legally binding undertaking to her broker that all funds deposited in the account belong to her. This is a requirement of our laws against money-laundering. So your entire scheme is illegal and would be considered fraudulent by the authorities.

Thanks4Help

Can it not be considered as he borrowed it from us for trading and he would return it back?
Amount involved is not very high as it's an experiment. May be 20k to 50k GBP.
Any other way out of it's still an issue please?

masonic

He would still be breaching his account conditions if he lets someone else use his account. Financial institutions take their obligation to "know their customer" quite seriously. Your plan is to mislead the broker as to the true identity of the person using the account. This could result in the named account holder receiving a fraud marker, having other accounts closed, and being able to open a bank account in the future.

Your friend is putting himself at risk by agreeing to open an account for this purpose. If it were him posting, the advice would be don't do it.

Is there not some sort of practice account you could open yourself to test out this trading strategy?

ColdIron

What would happen to your money if he died?

prowla

Sounds like money laundering to me...

(Not saying it is, but that's how the mechanism could be viewed.)

km1500

No, you can't do what you re proposing.

eskbanker

Thanks4Help said:

My friend has a stock trading strategy that is working very well in India. He wants to explore it for other countries.

Why, i.e. what stops him from putting more money into the existing scheme?  I don't know anything about the trading environment there but would assume that it's possible to invest in companies listed elsewhere, or if it's some sort of volume-related concern, then seeking to alleviate this by trying to operate in other jurisdictions is doomed to failure....

lr1277

Does the trading have to be in the UK? About 20 years ago as a British citizen living in Britain I opened a share dealing account in the USA. They were quite happy at the time as a non-resident to have an account. I did have to complete a W8-BEN form so I didn’t have to pay taxes in the USA. Though I don’t know if the situation is the same now.

I think I gave seen on here clients of Interactive Brokers, not living in the UK opening an account with them. Since I am not sure you could investigate further.