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If there had been a transfer into the pre 2008 mixed fund before 6 April 2008 from another offshore account, the individual would have needed to take the following steps.

Step 1

Calculate the total amount of income and chargeable gains in that other overseas account immediately before the transfer took place.

Step 2

Once identified work out what proportion of the total income and chargeable gains is income and what proportion is chargeable gains.

»Ê¹ÚÌåÓýapp transfer to the mixed fund account will consist of income and chargeable gains in the proportions as worked out at step 2.

Example C

Sanjeev has 2 accounts which contain funds that arose pre 6 April 2008. On 16 January 2007 a transfer was made from his BVI account (the other account) of £2 million to his Jersey account (the mixed fund account).

After the transfer the Jersey account contains £7.8 million.

Sanjeev knew that prior to the transfer the Jersey account contained:

Capital £1,200,000

Income £4,000,000

Chargeable Gains £600,000Total £5.8 million

Sanjeev needs to follow steps 1 and 2 on his BVI account to work out what the £2 million transfer was.

»Ê¹ÚÌåÓýapp BVI account before the transfer contained:

Capital £450,000

Income £2,250,000

Chargeable Gains £1,750,000Total £4,450,000

Step 1 the total income and gains in the BVI account was:

Income £2,250,000

Chargeable Gains £1,750,000Total £4 million

Step 2 the proportions are:

Income 56.25%

Chargeable gains 43.75%

Applying these proportions to the £2 million transfer means that Sanjeev transferred:

Income £1,125,000

Chargeable Gains £875,000 to his Jersey account.

»Ê¹ÚÌåÓýapp Jersey account after the transfer contains:

Capital £1,200,000

Income £5,125,000

Chargeable Gains £1,475,000Total 7.8 million

Provided all the conditions are met Sanjeev can if he wishes cleanse his Jersey account.

If the individual cannot identify the make-up of the transfer, because they do not have sufficient evidence of what was in the other account, then the transfer will be treated as income.

So instead

Example D

»Ê¹ÚÌåÓýapp facts are identical to example C, except that Sanjeev does not know what was in his BVI account before the transfer.

He cannot complete steps 1 and 2, so the whole £2 million transfer to his Jersey account will be treated as income.

This means that after the transfer his Jersey account will contain:

Capital 1,200,000

Income £6,000,000

Chargeable Gains £600,000Total £7.8 million

Provided all the conditions are met Sanjeev can if he wishes cleanse his Jersey account.