Income Tax (Trading and Other Income) Act 2005 section 381C

Person liable

Section 381C identifies the person who is liable to pay income tax on disguised interest under the disguised interest provisions.

• The person who receives or is entitled to the return (or part of the return) from the arrangement is the person liable for the tax.
• This mirrors the standard rule for who is liable for tax on ordinary interest income.
• Liability follows entitlement — if you are entitled to receive the return, you bear the tax charge, even if you have not yet received it.
• Where only part of a return is received or due to a particular person, that person is liable for the tax on that part only.