Remittance Basis: Introduction to the Remittance Basis: Transitional Provisions: Relevant foreign income and offshore loans - Example 4
Johan is a UK resident, non-domiciled remittance basis user. He arranges with an overseas bank that he will be able to borrow £1,000,000 to buy a UK house. Contracts for the purchase of the property were exchanged in October 2007 but completion of the sale did not take place until 31 March 2008 and the mortgage funds were not transferred by the bank until completion. Under the terms of the mortgage facility the money is regarded as ‘lent’ by the bank at the time it is transferred.
The conditions for grandfathering relief are not met. That is because, although the agreement was made before 12 March 2008 and the funds were received in the UK and used to acquire the interest in the property before 6 April 2008, the money was not borrowed (drawn down) until after 12 March 2008.