188ÌåÓý

Continue the IoM account in example 1
Contents of the mixed fund as of the 3 September
Contents of the mixed fund as of the 3 October
Immediately before the offshore transfer on the 15 October

Continue the IoM account in example 1

Date	Descriptor	Debit	Credit	Balance	Category S809Q(4)	Note
-	Balance b/f	-	-	£32,000	-	-
31 Aug	Overseas salary (net of tax)	£5,000	-	-	f	-
31 Aug	UK salary	£10,000	-	-	a	-
3 Sept	Transfer to UK account	-	£5,000	-	-	1
15 Sept	Cheque - XYZ Travel Services (CI) Ltd	-	£10,000	-	-	2
30 Sept	Overseas salary (net of tax)	£50,000	-	-	f	-
30 Sept	Overseas Dividend	£350,000	-	-	g	-
30 Sept	UK salary	£180,000	-	-	a	-
3 Oct	Transfer to UK account	-	£5,000	-	-	3
15 Oct	Transfer to Swiss bank account	-	£350,000	-	-	4

Top of page

Contents of the mixed fund as of the 3 September

Note 1 - Immediately before the transfer on 3 September the mixed fund contained

s809Q para	Type of income	Amount
Para (a)	Employment Income	£10,000
Para (f)	Earnings subject to a foreign tax	£5,000
Para (i)	Income or capital not within another paragraph	£32,000

The transfer is regarded as coming from the ‘earliest paragraph�, that is Para (a), so the £5,000 is UK employment income. Although money has been brought into the UK, there is no taxable remittance as the money has already been taxed.

Note 2 - The next payment from the account is £10,000 for the family holiday flights to the USA. The full payment is a remittance because the service provided is in the UK - the flights begin or end in London.

The transfer is regarded as coming from each of the paragraphs in order; that is £5,000 from Para (a) and a taxable remittance consisting of £5,000 from Para (f).

Top of page

Contents of the mixed fund as of the 3 October

Note 3 - Immediately before the remittance on 3 October the mixed fund contained:

s809Q para	Type of income	Amount
Para (a)	Employment Income	£180,000
Para (f)	Earnings subject to a foreign tax	£50,000
Para (g)	RFI	£350,000
Para (i)	Income or capital not within another paragraph	£32

The transfer is regarded as coming from the ‘earliest paragraph�, that is Para (a), so the £5,000 is UK employment income.

Top of page

Immediately before the offshore transfer on the 15 October

Note 4 - The transfer of £350,000 to a new Swiss bank account is an offshore transfer. Immediately before the offshore transfer on 15 October the IoM bank account (mixed fund) is regarded as containing:

s809Q para	Type of income	Amount
Para (a)	Employment Income	£175,000
Para (f)	Earnings subject to a foreign tax	£50,000
Para (g)	RFI	£350,000
Para (i)	Income or capital not within another paragraph	£32,000
-	-	£607,000

The offshore transfer consists of an appropriate proportion of each kind of income, gain or capital, within the mixed fund, that is:

s809Q para	Type of income	Amount
Para (a)	Employment Income	£100,906
Para (f)	Earnings subject to a foreign tax	£28,830
Para (g)	RFI	£201,812
Para (i)	Income or capital not within another paragraph	£18,452

The Swiss bank account is another ‘mixed fund�, containing the income, gains and capital of the transferred amount. Assuming nothing else is added or taken away from the Swiss account in the interim, if in a couple of years� time Ahmid decides to remit £120,000 to the UK from his Swiss bank account, the same ordering rules will apply to the Swiss fund, so the remittance is regarded as consisting of £100,906 from Para (a) and £19,094 from Para (f).