Under ICTA88/S59 (1) tax under Schedule D may be charged on a
person receiving income on behalf of the person entitled to it. No
assessment should be made on a solicitor under ICTA88/S59 (1) in
respect of mortgage interest etc received by him on behalf of a
resident client. All such interest is passed on gross to clients,
who are liable to direct assessment under Case III of Schedule D.
Where it is normal practice in Scotland solicitors will
include on their self-assessments interest they receive when they
act for executors or trustees.
A solicitor may receive interest on behalf of a non-resident.
This may be because he has placed the client’s money in a
designated client account (see
BIM65805) or otherwise. No direct
assessment should be made on the solicitor except in the unlikely
event that he acts as the client’s “UK
representative” within the meaning of FA95/S126, (see AP163 -
AP171). This would only be the case if the solicitor acts as the
agent through whom the client carries on a trade in the UK.
Power to require a return of particulars of items of interest
paid gross is given by TMA70/S18. Forms 8-2 (new) may be used for
this purpose (see AP236). Discretion should be used in deciding how
frequently returns are to be called for. In Scotland, however, it
will be necessary to issue forms 8-2 (new) on an annual basis so
far as interest received by solicitors acting for executors or
trustees is concerned.
