PG电子

Dmitri is a remittance basis user in all tax years. As at 31 December 2010 he has a bank account in Moscow which contains the money from several sources (sterling used throughout for simplicity- see CG25391 - CG25394 for notes on exchange differences).

On 31 May, he uses 拢500,000 from this account to buy a small football club in Scotland. Has any of the income or gains been remitted to the United Kingdom?

The bank account is a mixed fund because it contains, or derives from, more than one of the kinds of income and capital listed at ITA07/S809Q(4). Money or other property has been brought to, received or used in the UK by a relevant person (Dmitri) and so the first condition A for there to be a 鈥渂asic remittance鈥� is met (see CG25341 above). The matching rules in ITA07/S809Q therefore apply to determine whether the second condition B is also met and, if so, the amount of income or gains remitted.

Step 1: categorise the mixed fund

Employment income (2009-10; not taxed)	拢25,000
Relevant foreign income	听
(2009-10 dividends from non-UK companies; not taxed)	拢5,000
Foreign chargeable gains (2009-10; not taxed)	拢100,000
Other capital	听
(return of capital on non-UK assets sold in 2009-10)	拢500,000
Total	拢630,000

These categories and others, and the order in which they are to be considered, are specified by ITA07/S809Q(4).

Step 2: match the transfer with the first category.

The amount in the first category (employment income; 拢25,000) is less than the amount transferred (拢500,000) so the transfer is treated as containing all that income.

Step 3: reduce the amount transferred.

The reduced amount of the transfer is 拢500,000 - 拢25,000 = 拢475,000

Step 4: return to step 2

Step 2(2): match the transfer with the second category

The amount in the second category (relevant foreign income; 拢5,000) is less than the reduced amount transferred (拢475,000) so the transfer is treated as containing all that income.

Step 3(2): reduce the amount transferred

The reduced amount of the transfer is 拢475,000 - 拢5,000 = 拢470,000

Step 4(2): return to step 2

Step 2(3): match the transfer with the third category

The amount in the third category (foreign chargeable gains; 拢100,000) is less than the reduced amount transferred (拢470,000) so the transfer is treated as containing all those gains.

Step 3(3): reduce the amount transferred

The reduced amount of the transfer is 拢470,000 - 拢100,000 = 拢370,000

Step 4(3): return to step 2

Step 2(4): match the transfer with the fourth category

The amount in the third category (other capital; 拢500,000) is more than the reduced amount transferred (拢370,000) so the transfer is treated as containing 拢370,000 of capital. (If the 拢500,000 capital comes equally from two sources, the transfer is treated as containing 拢185,000 from each source.)

In summary, the transfer is treated as a remittance of 拢25,000 employment income plus 拢5,000 relevant foreign income plus 拢100,000 foreign chargeable gain and tax is charged accordingly.

Going forward, the balance of 拢130,000 in the mixed fund is treated as consisting wholly of capital.