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Examples of the application of the remittance basis to the AIS

»Ê¹ÚÌåÓýapp application of the remittance basis to the AIS is not without complication. »Ê¹ÚÌåÓýapp following examples set out line HMRC takes in particular circumstances.

Example 1

Ann holds foreign securities ‘of the same kindâ€� X and Y which are disposed of in an interest period. »Ê¹ÚÌåÓýappy realise the following A and B amounts. (SAIM4110 explains the calculation of accrued income profits and losses.)

Security	Proceeds (£�000)	Amount A (£�000)	Amount B (£�000)
X (overseas)	100	10	-
Y (overseas)	60	-	(5)

»Ê¹ÚÌåÓýappre is an accrued income profit of £5,000 which will be treated as deriving from the proceeds of sale of security X. Assuming the proceeds are paid into a new bank account, there will be a mixed fund comprising capital of £95,000 and an accrued income profit of £5,000.

Example 2

Isabelle has 3 holdings of ‘the same kind ofâ€� foreign security, X, Y and Z. »Ê¹ÚÌåÓýappy are disposed of in an interest period and the proceeds are paid into separate accounts. »Ê¹ÚÌåÓýappy realise the following A and B amounts.

Security	Proceeds (£�000)	Amount A (£�000)	Amount B (£�000)
X (overseas)	100	7	-
Y (overseas)	200	-	(10)
Z (overseas)	70	4	-

In this situation there is an accrued income profit of £1,000. If the proceeds of disposal of all 3 bonds are paid into a single account there will be a mixed fund with capital of £369,000 and an accrued income profit of £1,000.

If the proceeds were paid into separate accounts HMRC would expect the accrued income profit to be allocated pro rata in proportion to the Amount A of securities X and Z or, if this would create an unreasonable result, by any reasonable method.