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HMRC internal manual

Business Income Manual

HM Revenue & Customs
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Solicitors: Duty to deduct tax on interest paid to a client

The solicitor will be required to deduct tax on interest paid to clients only where the interest is both:

  • ‘yearly’, and
  • paid to a client whose usual place of abode is overseas.

The obligation to deduct tax on yearly interest is discussed further in SAIM9070 onwards.

Note that as the solicitor is a person by or through whom interest is paid, he is a ‘relevant data holder’ for the purposes of Sch23 Finance Act 2011. This means he can be required to produce details of these payments under the data-gathering powers (see BIM65820).