Our submission and HMRC's subsequent reply (12 July 2012) are available here in Adobe (pdf) format.
A subsequent reply from HMRC was received on 14 August 2012. This is reproduced below:
Business Investment Relief for Non-Doms – part 2 schedule 12 FA 2012 – investment funded with loans – loans subsequently repaid using offshore income/gains
HMRC have confirmed that loans taken out after 6 April 2012 and subsequently repaid using foreign income and/or gains would, in principle, qualify for the business investment relief.
Concerns had been expressed on this point because s809VA(1)(b) gives relief only where (in the absence of the relief) income or chargeable gains would be regarded as remitted by virtue of the investment. Where borrowed monies are used to make the investment, it is not the investment which (in the absence of the relief) triggers the remittance; rather it is the subsequent repayment of that borrowing which triggers the remittance.
However, HMRC have confirmed that they take a wide view of the meaning of ‘by virtue of’ in this context and there is nothing in s809VA which requires that the remittance which would otherwise have occurred should take place in the same year as the relevant event to which it relates. It therefore follows that the remittance and claim can be in a year or years after the relevant event.
For non-doms wishing to invest in this way, there is therefore scope – through borrowing – to fund that investment through future offshore income/gains.
Claims should be made in the year(s) that the loan is repaid rather than the year the investment is made and careful records will obviously need to be kept for these purposes.
6 July 2012