The recent Court of Appeal decision in Ardmore Construction v HMRC [2018] EWCA 1438 has attempted to provide guidance for taxpayers in identifying whether payments of yearly interest possess a UK source with the consequent need for income tax at source to be deducted.
Need for income tax withholding
The issue of what constitutes UK source for the purpose of ITA 2007 s. 874 has been a tricky and unclear matter for many years and has been heavily guided by HMRC’s statements. Its importance lies in the fact that if the source of interest is UK then the payor is required to deduct income tax at the basic rate for the tax year in which it is made from each interest payment.
The guiding light on the issue for many years has been Westminster Bank v National Bank of Greece SA [1971] AC 945 a decision of the House
