Finance (No. 2) Act 2017

PART 4 Cleansing of mixed funds

44 (1) This paragraph applies for the purposes of the application of section 809Q(3) of ITA 2007 in relation to an individual (“P”).

(2) Section 809R(4) of ITA 2007 does not apply to an offshore transfer from a mixed fund where—

(a) the transfer is made in the tax year 2017-18 or the tax year 2018-19,

(b) the transfer is a transfer of money,

(c) the mixed fund from which the transfer is made is an account (account A) and the transfer is made to another account (account B),

(d) the transfer is nominated by P for the purposes of this sub-paragraph,

(e) at the time of the nomination no other transfer from account A to account B has been so nominated, and

(f) P is a qualifying individual.

(3) P is a qualifying individual if—

(a) section 809B, 809D or 809E of ITA 2007 (remittance basis) applied in relation to P for any tax year before the tax year 2017-18, and

(b) P is not an individual—

(i) who was born in the United Kingdom, and

(ii) whose domicile of origin was in the United Kingdom.

(4) An offshore transfer to which sub-paragraph (2) applies is to be treated as containing such amount of such kind or kinds of income and capital in the mixed fund immediately before the transfer as may be specified in the nomination under sub-paragraph (2)(d).

(5) An amount of a kind of income or capital specified under sub-paragraph (4) may not exceed the amount of that kind which is in the mixed fund immediately before the transfer.

(6) In this paragraph “mixed fund” and “offshore transfer” have the same meanings as in section 809R(4) of ITA 2007.

45 (1) This paragraph applies to a transfer made by a person (“P”) from a mixed fund where—

(a) the transfer is made in the tax year 2017-18 or the tax year 2018-19,

(b) the transfer is a transfer of money,

(c) the mixed fund from which the transfer is made is an overseas account (account A) containing pre-6 April 2008 income or chargeable gains,

(d) the transfer is made to another overseas account (account B),

(e) the transfer is nominated by the person for the purposes of this sub-paragraph,

(f) at the time of the nomination no other transfer from account A to account B has been so nominated, and

(g) P is a qualifying individual.

(2) P is a qualifying individual if—

(a) section 809B, 809D or 809E of ITA 2007 (remittance basis) applied in relation to P for any tax year before the tax year 2017-18, and

(b) P is not an individual—

(i) who was born in the United Kingdom, and

(ii) whose domicile of origin was in the United Kingdom.

(3) A transfer to which this paragraph applies is to be treated as containing such amount of such kind or kinds of income or capital in the mixed fund immediately before the transfer (for example, income or chargeable gains for a particular tax year) as may be specified in the nomination under sub-paragraph (1)(e).

(4) An amount of a kind of income or capital specified under sub-paragraph (3) may not exceed the amount of that kind which is in the mixed fund immediately before the transfer.

(5) In this paragraph and paragraph 46—

• “mixed fund” has the same meaning as in section 809R(4) of ITA 2007;

• “overseas account” means an account situated outside the United Kingdom;

• “pre-6 April 2008 income or chargeable gains” means income or chargeable gains for the tax year 2007-8 or any earlier tax year.

46 (1) This paragraph applies to determine, for the purposes of paragraph 45, the composition of the mixed fund referred to in paragraph 45(1).

(2) Sub-paragraphs (3) to (5) apply where a transfer of money is made before 6 April 2008 from the mixed fund to another overseas account.

(3) Take the following Steps—

• Step 1. Calculate the total amount of income and chargeable gains in the mixed fund immediately before the transfer (“the total income and gains”).

• Step 2. Calculate what proportion of the total income and gains is income and what proportion is chargeable gains.

(4) If the amount transferred does not exceed the total income and gains, the transfer is to be treated as if it consisted of income and chargeable gains in the proportions found under Step 2 in sub-paragraph (3).

(5) If the amount transferred exceeds the total income and gains, the transfer is to be treated as if it consisted of—

(a) all the income and chargeable gains that were in the mixed fund immediately before the transfer, and

(b) in respect of the balance, other capital from the mixed fund.

(6) Sub-paragraphs (7) and (8) apply where—

(a) a transfer of money is made before 6 April 2008 from another overseas account to the mixed fund, and

(b) there is insufficient evidence to determine the composition of the transfer.

(7) Take the following Steps—

• Step 1. Calculate the total amount of income and chargeable gains in the other overseas account immediately before the transfer (“the total income and gains”).

• Step 2. Calculate what proportion of the total income and gains is income and what proportion is chargeable gains.

(8) The transfer is to be presumed to consist of income and chargeable gains in the proportions found under Step 2 in sub-paragraph (7).

(9) For the purposes of Steps 1 and 2 in sub-paragraph (7), if there is insufficient evidence to say that an amount is income or that it is chargeable gains, treat it as income.