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The taxpayer did not declare in his self assessment tax return his share of interest from a joint bank account held with his wife. He said that, until the interest was withdrawn from the account, it was not liable to be taxed.
HMRC disagreed and assessed him to tax and interest on the interest. The taxpayer appealed.
The First-tier Tribunal said, under ITTOIA 2005 s 370, tax was charged on ‘the full amount of interest arising in the tax year’. The interest arises when it is credited to an account, and therefore the interest that was credited to the joint account in 2006/07 was taxable in that year.
The tribunal confirmed that ITA 2007, s 836 confirmed the taxpayer was liable to tax on 50% of the interest.
The taxpayer’s appeal was dismissed.
