offshore money, offshore ETF traded on LSE - remittance ?

BlisteringBarnacles

>  "IBKR may look like a UK office (my statement actually says 20 Fenchurch Street)"

Okay ... well, my wording is probably not ideal.

My Interactive brokers statement does have a London address. BUT, the Interactive broker customer agreement says "you shall be a client of IBLLC, and not of IBUK, for the purposes of the provision of the Client Money and Custody Services. The legal, regulatory, and settlement regime applicable to IBLLC and to the entities in which your money, securities and other assets will be held will be different from that of the United Kingdom (i.e., any client money and custody Rules promulgated by the FCA will not apply)".
https://www.bogleheads.org/forum/viewtopic.php?p=7369681#p7369681

The money I wire is from US bank to US holding bank account (Citibank New York) of Interactive Brokers. The US dollars flows from US bank to US bank.

This is no different to, for example TransferWise. I am UK resident and have an account with them. I have 2 "balances" with 0 balance : one for GBP (sort code/account number, Shoreditch, London) and one for USD (routing code, account number, Woodhaven NY). I have clarified with WISE support on more than one occasion that wiring US dollar funds from US bank to my WISE balance would not constitute a remittance into UK since money flows from US bank to US bank, altho I have not done this transfer ever.

Further chats with LLM : https://chatgpt.com/share/67373fa4-2290-8002-8f1c-beb0b92bf28d

3) Location of Interactive Brokers: Although your IBKR account is ultimately handled by IB LLC (the US entity), it’s a reasonable concern that the account statements have a UK address, as this could create the impression of UK involvement. However, from a tax perspective, the physical location of the brokerage firm or where it’s regulated is typically less significant than the domicile of the funds you’re trading (in this case, Irish-domiciled ETFs) and the source of the funds (US dollars in the US).

4) Statement Address: HMRC is generally more concerned with the flow of funds rather than administrative details like the address on a statement. In your case, the funds are sourced offshore, and they’re used to invest in non-UK domiciled ETFs, so there’s a strong argument that this setup does not constitute a remittance.

On another note there is a clarification on the taxationweb thread.
https://www.taxationweb.co.uk/forum/purchase-of-irish-etf-listed-in-london-for-uk-non-dom-remittance-risk-t50701.html

Thank you.

BlisteringBarnacles

poseidon1 said:

Seems you are still operating on remittance basis for mixed pre 2008 funds. You may therefore be interested in the proposed Temporary Repatriation Facility to be implemented in 2025 as follows:

'A new Temporary Repatriation Facility will be available for individuals who have previously claimed the remittance basis. They will be able to designate and remit at a reduced rate foreign income and gains that arose prior to the changes. This includes unattributed foreign income and gains held within trust structures. The Temporary Repatriation Facility will be available for a limited period of 3 tax years, from 2025 to 2026. The Temporary Repatriation Facility rate will be 12% for the first 2 years and 15% in the final tax year of operation'

Spoke to a tax advisor (who deals with international taxation) in a well known company just now. Got free advice in the first few minutes. Very kind of them : My recent purchase of offshore ETF using offshore money and offshore broker (IBLLC) is not a remittance even if the trade occurred in LSE. He told me not to worry about it.

Regarding clearing the old tax pre-2008, yes, they would need to work it out and it does look like I would have to pay UK tax (if I am going to remit). he also mentioned the 12% "repatriation facility" tax that you mentioned above, thanks again, poseidon1. The details will need to be worked out, whether I can get Foreign tax credit relief etc etc.

This advisor is good, worth investing some time and money on. Time to make an appointment and clarify everything and sort it all out.

Will not name them here but if anyone wants the name please PM me.

poseidon1

BlisteringBarnacles said:

poseidon1 said:

Seems you are still operating on remittance basis for mixed pre 2008 funds. You may therefore be interested in the proposed Temporary Repatriation Facility to be implemented in 2025 as follows:

'A new Temporary Repatriation Facility will be available for individuals who have previously claimed the remittance basis. They will be able to designate and remit at a reduced rate foreign income and gains that arose prior to the changes. This includes unattributed foreign income and gains held within trust structures. The Temporary Repatriation Facility will be available for a limited period of 3 tax years, from 2025 to 2026. The Temporary Repatriation Facility rate will be 12% for the first 2 years and 15% in the final tax year of operation'

Spoke to a tax advisor (who deals with international taxation) in a well known company just now. Got free advice in the first few minutes. Very kind of them : My recent purchase of offshore ETF using offshore money and offshore broker (IBLLC) is not a remittance even if the trade occurred in LSE. He told me not to worry about it.

Regarding clearing the old tax pre-2008, yes, they would need to work it out and it does look like I would have to pay UK tax (if I am going to remit). he also mentioned the 12% "repatriation facility" tax that you mentioned above, thanks again, poseidon1. The details will need to be worked out, whether I can get Foreign tax credit relief etc etc.

This advisor is good, worth investing some time and money on. Time to make an appointment and clarify everything and sort it all out.

Will not name them here but if anyone wants the name please PM me.

Great to see you finally sourced appropriate professional advice. For any UK resident Non dom with appreciable offshore untaxed income/gains, I consider it essential to be professionally advised, so it was generous of you to offer to share details of the firm you have found for those interested.

Seems to me once the new rules go live next April, this will present a worthwhile window of opportunity for all non doms affected to consider taking advantage of the 'Repatriation facility' to onshore monies at comparatively low tax cost. Simplifying the horrendously complex non dom tax rules should be welcomed by non doms, although not so appealing for the expensive tax planning and compliance industry who have benefited from the complexity.

BlisteringBarnacles

Thanks poseidon1.

Actually, initially the advisor shocked me by saying the repatriation tax would be 12% not just on the untaxed pre-2008 investment income, but on the entire offshore money including already taxed income post 2009 plus the capital, since everything is "mixed capital". They said they can work out whether it might be beneficial to remit earlier than Apr 2025. But then within 1 hour the same advisor called me back  and clarified that they were wrong and the repatriation tax would only be on the untaxed amount. Whew ! This advisor works in 'international tax' in the firm, but there is a specialist in 'non domicile' so the first advisor probably checked with the latter.

I got a little worried about their competence but the fact that they checked and came back to me and corrected their statement (all of this was free) increases my respect for them. The rates are 250 GBP per hour and if they have to pull in a partner, that would cost me 400 GBP per hour. When the non dom laws were introduced (2008) I spoke to them - a different advisor at the time. In those days the cost was only 100 GBP per hour and 250 ph for partner. Inflation... I remember the meeting between me and that advisor did not go great at that time, we had communication difficulties. However, that advisor did clarify things in writing. Looking back at that documentation, I must say it is pretty decent. so I am probably going to stick with them.

In July, I spoke to a chartered financial planner / wealth manager in London (who I thought had a lot of integrity) and after some discussion he thought we might not be compatible and I might be better off just doing DIY. But still, a decent bloke whom I would recommend to anyone. He charges fixed fee (not %AUM), uses Dimensional Funds, so Fama French and all that. But his fixed fee came out almost as high as the %AUM folks so I was a bit hesitant. Who knows, I may still go to him. But when we parted, even tho' I was not going to be his client, he kindly offered to give me the name of his tax guru who is "also good with US laws". Dont know how much he charges but the wealth manager asked me : "why do you want to do this cheaply ? Why not spend good money on a great tax advisor ?"

The alternative is super duper expensive firms with names such as "Lastname & Lastname" . But just because someone charges 1000 GBP per hour does not necessarily mean they would be the Stephen Hawking of International Taxation.

decisions decisions ...

poseidon1

BlisteringBarnacles said:

Thanks poseidon1.

Actually, initially the advisor shocked me by saying the repatriation tax would be 12% not just on the untaxed pre-2008 investment income, but on the entire offshore money including already taxed income post 2009 plus the capital, since everything is "mixed capital". They said they can work out whether it might be beneficial to remit earlier than Apr 2025. But then within 1 hour the same advisor called me back  and clarified that they were wrong and the repatriation tax would only be on the untaxed amount. Whew ! This advisor works in 'international tax' in the firm, but there is a specialist in 'non domicile' so the first advisor probably checked with the latter.

I got a little worried about their competence but the fact that they checked and came back to me and corrected their statement (all of this was free) increases my respect for them. The rates are 250 GBP per hour and if they have to pull in a partner, that would cost me 400 GBP per hour. When the non dom laws were introduced (2008) I spoke to them - a different advisor at the time. In those days the cost was only 100 GBP per hour and 250 ph for partner. Inflation... I remember the meeting between me and that advisor did not go great at that time, we had communication difficulties. However, that advisor did clarify things in writing. Looking back at that documentation, I must say it is pretty decent. so I am probably going to stick with them.

In July, I spoke to a chartered financial planner / wealth manager in London (who I thought had a lot of integrity) and after some discussion he thought we might not be compatible and I might be better off just doing DIY. But still, a decent bloke whom I would recommend to anyone. He charges fixed fee (not %AUM), uses Dimensional Funds, so Fama French and all that. But his fixed fee came out almost as high as the %AUM folks so I was a bit hesitant. Who knows, I may still go to him. But when we parted, even tho' I was not going to be his client, he kindly offered to give me the name of his tax guru who is "also good with US laws". Dont know how much he charges but the wealth manager asked me : "why do you want to do this cheaply ? Why not spend good money on a great tax advisor ?"

The alternative is super duper expensive firms with names such as "Lastname & Lastname" . But just because someone charges 1000 GBP per hour does not necessarily mean they would be the Stephen Hawking of International Taxation.

decisions decisions ...

Have noted the hourly charge rates which actually sound pretty reasonable for what is probably a mid tier London based Chartered accountancy firm.

Certainly they are in line with senior fee earner and partner's  charge rates from 10 years ago that I recollect.

Good to know the firm operates a collegiate approach towards client advisory services, no single individual can know everything relevant to tax planning advice for non doms and their offshore structures.
A team approach is necessary, and the costs are not exactly cheap, but as you are aware specialist and reliable 'know how ' comes at a cost for a reason.You wouldn't take your high end Ferrari to a general car mechanic at the local high street for servicing!

BlisteringBarnacles

The problem is : Its not a Ferrari LOL :-) Its imported allright (offshore money) but more like a Fiat (small potatoes)

LOL !

Marlboro187

Hello, I have similar questions about non-dom tax matters. If you could recommend the tax advisor that helped you in the PM would be highly appreciated!