Income Tax (Trading and Other Income) Act 2005 section 371

Person liable

Section 371 identifies who is liable to pay tax on interest income charged under this chapter of the Act.

• The person liable for tax on interest is the person who receives the interest or is entitled to receive it.
• The phrase "receiving or entitled to" has been tested extensively in case law, with courts evolving from focusing primarily on receipt to considering whether any benefit has accrued to the taxpayer.
• Both actual receipt of interest and legal entitlement to interest can independently create a tax liability.
• The rule applies regardless of whether the interest has been physically received, provided the person has a right to it.