HMRC’s position is that any use of unremitted foreign income/gains as collateral for a loan brought into or used in the UK constitutes a remittance but until 4 August 2014 they were prepared concessionally to treat collateralised loans for genuine commercial purposes as not constituting remittances. The announcement made on 4 August 2014 included a period of grace for pre-existing commercial loans that were repaid or restructured before 6 April 2016 so as not to use unremitted foreign income/gains as security, not to be treated as remittances of the foreign income/gains concerned.
HMRC proposed to treat commercial loans that were not restructured before 6 April 2016 as remittances of the foreign income/gains made when the loans were first used in or brought into the UK, not just from their change of practice. (Loans secured on income/gains realised before 6 April 2008, i.e. before the present remittance basis rules came into force, are unaffected by this HMRC practice.)
The original announcement on 4 August 2014 would have meant that non-doms using unremitted foreign income or gains as collateral for loans enjoyed in the UK had to repay or reorganise all such loans by 6 April 2016 or be taxed as if they had remitted the foreign income/gains when the loans were first brought into or used in the UK.
For non-doms who could not repay or reorganise their loans that could have meant additional tax charges going back as far as 2008/09. Fortunately a degree of common sense has prevailed and arrangements already in existence on 4 August 2014 will now be unaffected by the change.