On 21 June 2018, the Court of Appeal10 upheld the Upper Tribunal’s decision in the Ardmore case. In summary, a multifactorial test is to be used when determining the “source” of interest (relevant for the purposes of the scope of UK withholding tax on interest payments).

The Court confirmed that all facts must be considered and declined to set out any general principles as to which factors may be most determinative of the question of “source”. The test was whether a “practical” person would regard the source of interest as being in a particular jurisdiction.

Despite this, and the Court’s recognition that the test was “acutely fact-sensitive”, on balance the decision has probably done little to advance the general market approach of considering, as a first step, the published HMRC guidance on this question (which states HMRC’s view to be that the most important factors are the residence of the debtor and the location of the debtor’s assets).

The decision can be viewed here.