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Advice on evidence re. tax-deductable interest
Landlord and Tenant Act 1987, s 42 provides that a flat management company can be treated as a discretionary and accumulation trust.
This means that interest paid on a deposit made by such a company should have tax deducted despite the company status.
Banks and building societies must hold evidence before they begin making net payments to a company.
As there is no trust deed in these cases, HMRC suggest that they obtain a signed declaration from the company certifying that the funds to be held in the bank account are, under s 42, held by the company in its capacity as a trustee of a trust to hold service charges.
