RDRM35670 | Remittance basis: Mixed funds: Cleansing of mixed funds: Qualifying individual

Cleansing was not available to any individual who was born in the UK with a UK domicile of origin.

A person was a qualifying individual if the remittance basis applied to them under any of the following sections of ITA 2007 in any year before the tax year 2017-2018:

• Section 809B

• Section 809D (their unremitted foreign income and gains were less than £2000), or

• Section 809E (without making a claim, other cases)

These sections had effect from 6 April 2008 so the individual must have been a remittance basis user between 2008-2009 and 2016-2017 (inclusive).

Example

Chen has been UK resident since the 2006-2007 tax year and has claimed the remittance basis for all years up to 5 April 2015, and is therefore a qualifying individual.

She has an offshore bank account which contains money from various sources that arose in several different years and is therefore a mixed fund account.

Chen can apply the cleansing provisions against all funds contained in this account.

Immediately before the transfer nomination the account contained:

2006-2007 £500,000 foreign income

2007-2008 £600,000 foreign income

2008-2009 £7.5 million foreign income already subjected to foreign tax

2009-2010 £4.5 million foreign income

Chen opens a new account in 2017-2018. She nominates under the cleansing provisions her £5.6 million (untaxed foreign income) transferring this to her new account and leaving the £7.5 million taxed foreign income in the original account.