Tax on interest not received because of early closure penalty

ColdIron

talexuser said:

It is, but the principle of tax is supposedly on income, and I didn't get the total income

But you did get the total income or full interest as detailed in your own posts

Why else are you considering misrepresenting it?

talexuser

All explained in my original post, the rest is just endless repetition. 

eskbanker

talexuser said:

All explained in my original post, the rest is just endless repetition. 

You don't have to keep repeating the same theory after it's been so comprehensively debunked!

intalex

Funny thought...

With reference to the other discussion about multi-year fixes and when its corresponding interest portions are taxable, there is a specific definition of when interest "arises".

For interest offset by penalties at the time of early closure, where does the interest stand with respect to that definition of "arises"?

The only interest that would be accessible is the amount after deduction of the penalties (if interest > penalty), so does that mean the amount offset by the penalties never "arose" and therefore never taxable?

masonic

intalex said:

Funny thought...

With reference to the other discussion about multi-year fixes and when its corresponding interest portions are taxable, there is a specific definition of when interest "arises".

For interest offset by penalties at the time of early closure, where does the interest stand with respect to that definition of "arises"?

The only interest that would be accessible is the amount after deduction of the penalties (if interest > penalty), so does that mean the amount offset by the penalties never "arose" and therefore never taxable?

We have been discussing Dunmore v McGowan (1978) in that thread in detail, so you'll recall that this case centred on interest being used in this manner. It was ruled in the Court of Appeal that the interest "arose" immediately, because the appellant benefited though reduction of a liability he had. This is now settled in law.

intalex

masonic said:

We have been discussing Dunmore v McGowan (1978) in that thread in detail, so you'll recall that this case centred on interest being used in this manner. It was ruled in the Court of Appeal that the interest "arose" immediately, because the appellant benefited though reduction of a liability he had. This is now settled in law.

A saver benefits immediately from interest being credited in that the credited interest starts earning its own interest (unlike interest that is still in "accrued" state) - does that benefit therefore make the credited interest as arisen?

masonic

intalex said:

masonic said:

We have been discussing Dunmore v McGowan (1978) in that thread in detail, so you'll recall that this case centred on interest being used in this manner. It was ruled in the Court of Appeal that the interest "arose" immediately, because the appellant benefited though reduction of a liability he had. This is now settled in law.

A saver benefits immediately from interest being credited in that the credited interest starts earning its own interest (unlike interest that is still in "accrued" state) - does that benefit therefore make the credited interest as arisen?

This is probably a discussion for the other thread, but I would suggest that there is no benefit until maturity, when all of the interest arises. However, I'm not aware of any case law testing this.

talexuser

eskbanker said:

You don't have to keep repeating the same theory after it's been so comprehensively debunked!

It needed no debunking, my first post stated the legal position very clearly, the final paragraph my personal opinion, the rest just a bit of fun.

eskbanker

talexuser said:

eskbanker said:

You don't have to keep repeating the same theory after it's been so comprehensively debunked!

It needed no debunking, my first post stated the legal position very clearly, the final paragraph my personal opinion, the rest just a bit of fun.

Your first post alleged (no fewer than four times) that you were being taxed on interest income that you didn't receive, which was debunked both then and, unsurprisingly, every time you've repeated that assertion since - are you perhaps adopting the Trumpian tactic that a falsehood repeated often enough might eventually be perceived by some as true?

talexuser

Read again, for the thread starter question in my first post I stated that if the penalty was taken from interest you are ok, if from capital you are not. In my case the penalty was from capital, upheld by T&Cs, end of story for the present legal position. My opinion is that this is unfair.

I would argue that a Building Soc is a savings institution  where the expectation is your captal is safe (up to 85k) and if a headline bullet point says penalty based on X days of interest, the common assumption would be that the penalty would be taken from interest. Declaring capital in small print is borderline unfair with unintented taxation consequences and consumer protection generally tries to avoid being taken in by obscure T&Cs. I admit I hadn't actually thought of the scenario where you close immediately and haven't enough interest to cover the charge of opening the account, but that could be done under a specific early closure term. 

As for the declaration, obviosly it is wrong, but in my case the amount will be washed out in the rounding errors HMRC apply to my gross figures compared to my spreadsheet calculations of several decimal places which are always therefore a few pounds out every year in a large 5 figure sum, which is ignored. Nowhere do I encourage anyone to do likewise,  my decision with my consequences, probably non existent, just point out the irony of arguing over a few pounds compared to the vast amounts of other fraud that otherwise remains uninvestigated. But then I'm not Nadim Zahawi