am I right in understanding that the proceeds from an offshore loan constitute 'clean capital'? I am talking about a true offshore loan with proceeds that are kept offshore, not about an onshore loan with offshore security...
As I am working through a set of mixed funds, I have come across the following 2 examples of such offshore loans. I am simplifying them here and used hypothetical figures, but the basics are in line with the situation I am reviewing
1) Unsecured offshore loan
Offshore bank provided me with a £100 loan - to be used for a future offshore investment.
The loan proceeds were transferred into one of my offshore accounts - containing £50 of offshore income (say RFI). Post-transfer that offshore account contains £150 of which £50 RFI and £100 loan proceeds.
The offshore investment opportunity then fell away after a month or so - for legitimate external reasons - and the loan was settled offshore from this account containing £150. Post-settlement, there is £50 left in the account.
How does that £50 get looked at? Do the mixed fund offshore transfer rules apply and is the £100 of loan proceeds regarded as clean capital? In which case, I have used 67 of capital (ie loan proceeds) and 33 of RFI to settle the loan, and I am left with 33 of capital and 17 of RFI in the account.
2) Secured offshore loan (ie margin type loan)
similar scenario as above but now all funds are actually used to purchase an offshore investment (for value of 150) over which the offshore lender takes security in a margin loan type set-up. that investment is sold after some years at a slight gain, say for 175 and the loan is settled from the sale proceeds, leaving 75 in the account.
using the same logic as above - am I now left with 14 of CG, 29 of RFI and 57 of clean capital having used 11 of CG, 21 of RFI and 43 of capital to settle the loan out of the pre-settlement balance of 25 CG, 50 RFI and 100 capital?
Thoughts / feedback welcome...
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