Residence of debtor

The taxpayer was resident and domiciled in the UK. He was the principal beneficiary of an employer-funded retirement benefit scheme the trustee of which was Blackstar (Isle of Man) Ltd a company resident in the Isle of Man (IoM).

The trustee made loans to the taxpayer who paid interest on the sums. He made the payments from his IoM bank account to the local account of the trustee.

HMRC said the interest was subject to tax under ITA 2007 s 874 which was assessable on the payer under s 963. The department raised assessments on the taxpayer who appealed on the ground the interest was not taxable because it arose in the IoM.

The First-tier Tribunal agreed the situs of the debt was the IoM but that was “of very little weight”. And the place where the payment was made – also the Isle of Man...