Administration—statutory interest is yearly interest (HMRC v Lomas)

Table of contents

• Original news
• What are the practical implications of this case?
• What was this case about?
• What did Court of Appeal decide?
• Case details

Article summary

Tax analysis: The Court of Appeal overturned the High Court’s decision and allowed HMRC’s appeal, finding that statutory interest payable by a company in administration under rule 2.88(7) of the Insolvency Rules 1986 (SI 1986/1925) or its replacement Rule 14.23(7) of the Insolvency Rules 2016 (SI 2016/1024) (ie payable only if and when a surplus is established and only after payment of the proven debts) is yearly interest and therefore any such payment is subject to an obligation to deduct income tax under section 874 of the Income Tax Act 2007 (ITA 2007).