N Coxon v HMRC

In N Coxon v HMRC (TC02530 – 20 February) an individual (C) who was resident in the UK had agreed to buy a property (which had not yet been built) in Cyprus. To finance the purchase he borrowed a large sum of money (in Swiss francs) from a Cyprus bank. He exchanged these for Cypriot pounds which he deposited in an account with the same bank. He was credited with interest on this deposit account. He subsequently became dissatisfied with the delay in building the property and stopped repaying the loan. The bank then froze the deposit account which he had opened. When HMRC discovered this they issued discovery assessments charging tax on the interest which had been credited to the deposit account. C appealed contending that he should not be taxed on the interest...