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HMRC internal manual

Residence, Domicile and Remittance Basis Manual

HM Revenue & Customs
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Remittance Basis: Amounts Remitted: Mixed Funds: Remittances from mixed funds - overview

A mixed fund is an overseas fund of money and/or other property which contains or consists of more than one type of income or gains, and/or income or gains from more than one tax year. A simple example would be a single offshore bank account which contains an individual’s relevant foreign earnings, interest (relevant foreign income) and some proceeds including a chargeable gain from the disposal of an asset.

Where Condition A of ITA07/s809L applies, the mixed fund rules (ITA07/s809Q) work to determine if Condition B is also met. They do this by applying ordering rules to the types of income and/or gains in the fund and (for tax purposes) identifying property brought to the UK out of the fund with the fund’s contents in the same order. It can then be determined whether what is brought to the UK satisfies Condition B by virtue of being treated as (for instance) relevant foreign earnings.

The effect of these rules is that foreign income and gains of a taxpayer that are remitted to the UK under ITA07/s809L(2) and (3) from a mixed fund are remitted to the UK in a certain order (ITA07/s809Q(3)).

There are other rules (ITA07/s809R(4)-(9)) that determine what is regarded as ‘leaving’ a mixed fund as a result of an ‘offshore transfer’, for example where money is spent outside the UK, or transferring money from a mixed fund to another offshore account.

Although the principle behind the rules is relatively straightforward, their application requires detailed knowledge and accurate accounting showing precisely what has entered and left the fund, when and where, with complete details of all transfers where money leaves the mixed fund. You will need to obtain this information in order to check any amounts remitted from mixed funds.

Conditions C and D

The mixed fund provisions do not apply to Condition C or Condition D in ITA07/s809L.

Transitional provisions

The mixed fund provisions do not apply to foreign income or gains that arose or accrued before 6 April 2008 (Sch 7 FA2008/para 89).

Refer to RDRM33100 for information about Conditions A and B

Refer to RDRM35000 for information about amounts remitted