Originally posted by Loan Ranger
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The repayment itself is okay. It has to be, to allow HMRC to make the claim that the legislation isn't retrospective. As they have stated if you don't want to pay the charge you can pay off the loan.
But why would anyone repay the loan when it is going to cost more than the loan charge, unless there is some earmarking going on? So there would be intense scrutiny.
However, if the repayment and thus the "notion" of a earmarking takes place after a person is no longer regarded as a resident for tax purposes (but before April 2019), then I think there is a reasonable chance that HMRC will regard it as too complex to pursue.
Both the Trust and the person could resist an enquiry or a request for a declaration by referring HMRC to the tax authority in the country where they are now tax resident.
Even if the Trust provided the information, HMRC would have to claim that leaving the county was tax avoidance, which isn't unlawful by itself. Except when the law says that tax avoidance is unlawful, which the quoted text sort of says.
Feels like Russian Roulette.
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