Commentary

A4.424 Deduction of tax from yearly interest

Administration and compliance

A4.424 Deduction of tax from yearly interest

A4.424 Deduction of tax from yearly interest

ITA 2007, s 874 requires tax to be deducted from specified payments of yearly interest made:

  1.  

    (a)     by a company

  2.  

    (b)     by a local authority

  3.  

    (c)     by or on behalf of a partnership of which a company is a member, or

  4.  

    (d)     by any person to a person whose usual place of abode is outside the UK

Neither (a) nor (b) applies where the payer is acting in a fiduciary or representative capacity1.

This does not apply to such payments of yearly interest as are specifically excluded (see A4.425).

For the purposes of (d) above, HMRC accept that a company which is non-resident under the case law central management and control test (see D4.103) may nevertheless have a usual place of abode in the UK, if it trades in the UK through a permanent establishment, the profits of which are liable to UK corporation tax (and are not exempted under a double taxation agreement). Payments of interest to the UK permanent establishment of such a company may therefore be made without deduction of

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