Section 809VO | Investments made from mixed funds

(1)This section applies if—

(a)but for section 809VA(2), income or gains would have been remitted to the United Kingdom by virtue of a relevant event, and

(b)section 809Q (transfers from mixed funds) would have applied in determining the amount that would have been so remitted.

(2)The relevant event counts as an offshore transfer for the purposes of section 809R(4).

(3)The holding is to be treated as containing a proportion of each kind of income and capital contained in the invested property equal to the fixed proportion.

(4)The “fixed proportion” is, unless subsection (4B) applies, the proportion of that kind of income or capital contained in the invested property by virtue of subsection (2).

(4A)Subsection (4B) applies, instead of subsection (3), for determining the composition of the holding in connection with the application of subsections (7) and (8) where the holding contains TRF capital (as a result of the designation of income or capital in the holding as TRF capital in the tax year after the tax year in which the relevant event occurred).

(4B)Where this subsection applies, take the following steps to determine the composition of the holding in connection with the application of those subsections—

Step 1Determine the amounts of each kind of income and capital that the holding was treated as containing by virtue of subsection (3).

Step 2Reduce the amount of each kind of income and capital by the amount (if any) of that income or capital as is TRF capital.

(4C)Where subsection (4B) applies, the “fixed proportion” is the proportion of that kind of income or capital treated as contained in the invested property by virtue of that subsection (instead of subsection (2)).

(5)“The invested property” means the money or other property used to make the investment.

(6)Subsection (7) applies in cases where—

(a)section 809VG(2) does not apply because an amount is taken offshore, re-invested or used to make a tax deposit, or

(b)section 809VM(4) does not apply because an amount is taken offshore or re-invested.

(7)The amount taken offshore, re-invested or used to make a tax deposit is treated, immediately after that step, as containing the fixed proportion (determined under subsection (4) or (4C) as the case may be) of each kind of income and capital contained in the holding.

(8)In cases where section 809VG(2) applies—

(a)the relevant affected income or gains are so much of the fixed amount of each kind of income or gain mentioned in subsection (1)(a) as reflects the relevant proportion of the portion of the investment affected by the potentially chargeable event (see section 809VG(6)),

(b)“the fixed amount” is the amount of that kind of income or gain that the holding is treated as containing by virtue of subsection (3) or (4B) (as the case may be), and

(c)section 809Q does not apply in determining the affected income or gains.

(8A)For the purposes of subsection (8)(a)—

(a)the “relevant affected income or gains” means—

(i)in a case where section 809VG(6A) applies to treat some of the affected income or gains as being comprised of TRF capital, so much of the affected income or gains as is not treated as being comprised of TRF capital, or

(ii)otherwise, all of the affected income or gains, and

(b)the “relevant proportion” of the portion of the investment means—

(i)in a case where section 809VG(6A) applies to treat some of the affected income or gains as being comprised of TRF capital, the proportion of the portion of the investment that is equal to the proportion of the affected income or gains as is not treated as being comprised of TRF capital, or

(ii)otherwise, the whole of the portion of the investment.

(9)Section 809R(2) and (3) and section 809S apply for the purposes of this section.