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HMRC internal manual

Company Taxation Manual

Particular bodies: local authorities: interest paid in full between authorities

Payments of interest before 1 October 2002 between local authorities that are exemptunder ICTA88/S519 (see CTM40855) could be paid in full, subjectto the following conditions:

  1. The onus was on the borrowing authority to ascertain whether or not the body receiving the interest was exempt under Section 519.
  2. If, exceptionally, interest was paid in full to a body that was not exempt under Section 519, the Revenue reserves the right to look to the paying authority for the tax if necessary.
  3. After the end of each financial year the authority paying the interest should have provided details of the amount paid in full to each other authority.

The arrangements for the payment of interest in full appliedalso to loans betweenhealth service bodies within ICTA88/S519A (see CTM40350 onwards)and to loans between local authorities and health service bodies.

From 1 October 2002 payment of interest between local authorities can be made withoutdeduction of tax as long as the conditions of ICTA88/S349A and ICTA88/S349B are satisfied(CTM40870).