Transfers from offshore bank account were taxable remittances

In Afzal Alimahomed v HMRC [2025] UKUT 00428 (TCC), the Upper Tribunal (UT) considered whether transfers from an offshore bank account and the use of an offshore credit card, were taxable remittances.

Background

Afzal Alimahomed was UK resident but non-UK domiciled. He claimed the remittance basis of taxation in 2016/17 and during that year entered into various transactions, including transfers from his offshore bank account to various UK bank accounts of people who were not 'relevant persons' (NRPs), as defined in section 809M, Income Tax Act 2007 (ITA).  Additionally, goods and services were purchased in the UK using Mr Alimahomed's credit card.

As the money, goods and services were received by NRPs, the transactions could only be remittances if they involved money, or property, brought into the UK by Mr Alimahomed.

HMRC issued a closure notice to Mr Alimahomed for 2016/17, in the amount of £133,681.90, on the basis that the transfers and payments were remittances under section 809L, ITA. Mr Alimahomed appealed to the FTT.  

FTT decision 

The appeal was dismissed. 

The FTT held that:

1) Transfers from Mr Alimahomed's offshore bank account to the UK accounts of NRPs (including his adult son and service providers) constituted remittances under section 809L(2)(a), ITA, having met both conditions A and B referred to in the legislation. In particular, the FTT considered that, initiating a transfer or authorising a payment, was sufficient to demonstrate that money, or other property, was brought to the UK by, or for the benefit of, a relevant person. 

2) Payments made using an offshore credit card for goods and services in the UK also constituted remittances creating a 'relevant debt', under section 809L(7), ITA. The FTT agreed with HMRC that a purchase via a credit card is equivalent to the cardholder authorising the credit card company to pay the bill for the goods or service, on their behalf. 

3) Jewellery which had been purchased in the UK for Mr Alimahomed and his wife was not exempt property under section 809Z2, ITA, because it was purchased in the UK using Mr Alimahomed's offshore credit card and the FTT considered that by using that card Mr Alimahomed had made a remittance to the UK. 

Mr Alimahomed appealed to the UT. 

UT decision 

The appeal was allowed in part.

In relation to the first issue, the UT agreed with the FTT that transfers from Mr Alimahomed's offshore bank account to UK accounts of NRPs constituted remittances. The UT rejected Mr Alimahomed's arguments that electronic bank transfers did not involve property being 'brought to' the UK, finding that 'money', in condition A of section 809L(2), included 'bank money' and that term did not require physical accompaniment of the property. The UT also noted that section 809V, ITA, which exempts direct payments to HMRC from being treated as remittances, clearly contemplated that direct bank transfers would otherwise be remittances.

With regard to the second and third issues, the UT concluded that the FTT had erred in law by failing to properly analyse what property was brought to the UK, for the purposes of condition A in section 809L. The UT was of the view that there could only ever be a relevant debt that gave rise to remittance if there was something the debt could relate to that fell within condition A, and it had not been explained what that was. Accordingly, the UT set aside the FTT's decision on the second and third issues and remitted those issues back to the FTT for a rehearing with additional evidence. 

Comment

This case provides helpful analysis on the meaning of 'money' and confirms that a bank transfer by a UK‑resident non‑domicile from their offshore account to a UK bank account of a NRP constitutes 'money… brought to the United Kingdom', under section 809L, ITA, and can be a taxable remittance.

The UT's decision also confirms that offshore credit card spending and 'relevant debts', under the remittance rules, is fact‑sensitive and this led the UT to set aside and remit those aspects of the appeal for reconsideration by the FTT.

The decision can be viewed here.