
1 
These Regulations may be cited as the 
Income Tax (Interest Relief) Regulations 1982,
and shall come into operation on 1st October 1982.
2 

(1) In these Regulations unless the context
otherwise requires:—
 “authorised officer”
 means the official registered by the
Board as being authorised for the purposes of these Regulations by the lender;

 “the Board”
means the Commissioners of Inland Revenue;
 “financial year” in relation to a lender means a period of 12 months or the period
(not necessarily a period of 12 months) for which the lender makes up its
accounts;
 “lender”
means a qualifying lender for the purposes of 
section 26;
 “limited loan”
means a loan to which either 
paragraph 5(1) or (2)
or paragraph 24(3) of Schedule 1 to
the Finance Act 1974 applies;

 “a qualifying borrower”
 has the meaning given by 
Part III of Schedule 7;
 “relevant loan interest”
 has the meaning given by 
Part I of Schedule 7;
 “Schedule 7”
means Schedule 7
to the Finance Act 1982;

 “section 26”
means section 26
of the Finance Act 1982;

 “section 28”
means section 28
of the Finance Act 1982;

 “tax year”
means a period of 12 months ending on 5th April.
(2) In the application of these Regulations
to Scotland—
(a) “a freehold
or leasehold estate” means any
interest in land; and
(b) any reference to a loan on the security
of such an estate is a reference to a loan upon a heritable security within
the meaning of section 9(8)(a)
 of the Conveyancing and Feudal Reform
(Scotland) Act 1970.
3 

(1) Loans the interest on which paid by a
qualifying borrower is relevant loan interest are loans specified for the
purposes of paragraph 7(1)(a) of Schedule 7
except—
(a) loans in respect of property which is
used as the only or main residence of a dependent relative or former or separated
spouse of his;
(b) loans in respect of living accommodation
which is for him job-related within the meaning of the provisions of 
paragraph 4A(3) of Schedule 1 to the 
Finance Act 1974; or
(c) loans to which the provisions of 
sub-paragraphs (b), (c)
or (d) of the said 
paragraph 7(1) apply.
(2) The lender shall send a copy of the notice
sent to it under the said paragraph 7(1)(a)
by the qualifying borrower to the Board within 30 days of receiving it.
(3) Where the borrower is unable to provide
the lender with the notice to which the said 
paragraph 7(1)(a) refers he may, if he considers
that the interest payable on his loan is or will be relevant loan interest,
apply to the Board for a notice under paragraph
7(1)(b) of Schedule 7 and the Board shall notify
him of their decision on his application.
4 
Loans of the following descriptions, not being loans to which the
interest on which paragraph 2(3) of Schedule
7 applies, are specified for the purposes of 
paragraph 7(1)(d) of Schedule 7—
(a) a loan secured on a freehold or leasehold
estate in respect of property in relation to which the loan was granted in
which the borrower (and in the case of joint borrowers each of them), or a
dependent relative, or former or separated spouse of his, is residing at the
time when the loan is made, or will so reside within 12 months of that time;
being a loan
(i) which is not a limited loan (unless it
is a limited loan in respect of which notice has been given to the Board under 
Regulation 7(1) before 1st December 1982);

(ii) in respect of which the lender has undertaken
(a) to inform the Board that it is a loan
to which this Regulation applies together with the name and address of each
borrower, and where known the Tax District to which he makes his return together
with his tax reference; and(b) to notify the borrower, not later than
30 days before the first payment of relevant loan interest falls due, that
interest payable on the loan appears to be relevant loan interest;and
(iii) in respect of which the lender has
not been notified that the interest is not relevant loan interest;
(b) a loan which is not a limited loan but
otherwise qualifies for relief under the provisions of 
paragraph 24 of Schedule 1 to the 
Finance Act 1974.
5 
Where the Board is satisfied that it is the practice for borrowers
to have been given relief under 
section 75 of the Finance Act 1972
 on the basis of amounts of interest paid to
a lender in a period of 12 months ending after February but before 6th April
and the lender, not being a lender within the provisions of 
paragraph 2(4) of Schedule 7, notifies the
Board that it wishes the tax deduction scheme to begin to apply on a date
before 6th April 1983 but not before 1st March 1983, the Board shall notify
it of the date on which the scheme may begin to apply accordingly.
6 
Where before 1st December in any year a lender notifies the Board
that it wishes home improvement loans which it has made to which 
paragraph 4(1)(b) of Schedule 7 applies to
be brought within the tax deduction scheme, the scheme shall begin to apply
to relevant loan interest payable on such loans in the tax year beginning
in the next following year; but in the case of home improvement loans to be
made on or after the date of the lender's notice to the Board it shall begin
to apply from the date specified in the notice.
7 

(1) 
(a) Subject to the provisions of 
sub-paragraph (b), where before 1st December
in any year a lender notifies the Board that it wishes limited loans which
it has made to be brought within the tax deduction scheme, the scheme shall
begin to apply in the tax year beginning in the next following year to the
relevant loan interest payable on those loans in respect of which the Board
has given notice as provided by paragraph 7(1)(b)
of Schedule 7; but in the case of limited loans
to be made on or after the date of the lender's notice to the Board it shall
begin to apply after the date specified in the notice, not being a date earlier
than 30 days after the date of the lender's notice;
(b) within 30 days of the lender's giving
such a notice the Board may notify the lender that the scheme shall not begin
to apply in accordance with its notice and, where the Board so notifies the
lender, the scheme shall begin to apply only on the date and to the loans
which the Board has in writing authorised.
(2) Where a lender has not so notified the
Board under paragraph (1)(a)
the tax deduction scheme shall not begin to apply in the following circumstances:—

(a) for the tax year 1983/84, in respect
of interest on a loan which was a limited loan
(i) when the interest was last charged by
the lender to the borrower's account in its records before February 1983,
or
(ii) in the case of a loan made after January
1983, when the loan was made;
(b) for the tax year 1984–85 and subsequent
tax years, in respect of interest on a loan which was a limited loan when
the interest was last charged by the lender to the borrower's account in its
records before March in the previous tax year.
8 

(1) Expressions used in this Regulation have
the same meaning as in section 28.

(2) Subject to the provisions of this Regulation
the amount of each combined payment and the date on which it becomes due from
a borrower, to whom a specified lender has given a notice under 
section 28(2)(a) to vary the terms of repayment
of the loan, shall be notified to the borrower by the lender.
(3) The notice under 
section 28(2)(a) shall be in a form prescribed
or authorised by the Board but shall not have effect unless—
(a) it contains a statement of the borrower's
right under section 28(2)(b)
to give a counter notice; and
(b) there is a period of not less than 30
days between the giving of the notice and the due date for the first of the
combined payments to which the notice relates.
(4) A borrower shall be entitled to give
a counter notice under section 28(2)(b)
not later than 3 months after the due date for the first combined payment
to which paragraph (2)
above refers.
(5) On receipt of the borrower's counter
notice under section 28(2)(b)
the lender shall give notice to the borrower of—
(a) the amount of the combined payments which
will be due from him after taking account of the requirements of 
section 28(4);
(b) the due date for the first such combined
payment which shall be—
(i) where the borrower gives a counter notice
under section 28(2)(b)
within 30 days of the lender's notice under 
section 28(2)(a), the due date for the first
combined payment to which paragraph (2)
above refers; or
(ii) in any other case, a date not later
than what, apart from the borrower's counter notice, would have been the date
of the second of his combined payments falling due after the date of that
counter notice;
(c) an estimate of the total period which,
assuming there is no change in the amount of the borrower's combined payments,
will be required to satisfy the principal and the interest on the loan by
means of those payments; and
(d) a statement of the borrower's right under 
section 28(4) to make additional repayments
of capital.
9 

(1) Sums recoverable by a lender under 
section 26(7) shall be recovered on a claim
to the Board for the purpose under these Regulations.
(2) Subject to 
paragraph (3) a claim shall be for the lender's
financial year, and is referred to in these Regulations as an “annual claim”.
(3) A claim may also
be made in accordance with Regulations 10
or 12 for a period shorter
than the claimant's financial year and is referred to in these Regulations
as an “interim claim”.

(4) No payment in respect of sums recoverable
on such a claim shall be made to a lender before 1st April 1983.
10 

(1) An interim claim
for a period allowed by paragraphs (2)
and (3) may be made not
later than 1 month, or such shorter period as the Board may allow, before
the date to which paragraph (5)
refers, and is referred to in these Regulations as an 
“interim claim in advance”.
(2) The periods for which an interim claim
in advance may be made are:—
(a) 1 calendar month; or
(b) 3 calendar months.
(3) Interim claims in advance made by a lender
may not (except where authorised by prior written approval of the Board) be
made for different periods.
(4) An interim claim in advance for a period
shall be based on an estimate of the amount deductible by borrowers in respect
of payments of relevant loan interest to the lender falling due in that period,
and the estimate shall be certified by an authorised officer of the lender
as being the best estimate that can reasonably be made of the amount deductible.

(5) If the Board are satisfied with the estimate
they shall pay a sum equal to the estimated amount deductible on the date
prescribed in paragraph (6)
or where it is not a working day the next following working day; if they are
not so satisfied they shall pay the lender such lesser sum, if any, as in
their estimation will approximate to the amount deductible.
(6) Subject to 
paragraph (7), the date referred to in 
paragraph (5) is—
(a) in the case of a claim for 1 calendar
month the 23rd of the month;
(b) in the case of a claim for 3 calendar
months the 15th of the second of those months.
(7) In the case of a claim for 1 calendar
month, if the lender so claims and satisfies the condition in 
paragraph (8), the date referred to in 
paragraph (5) above is the 2nd, 9th or 15th
instead of the 23rd of the month.
(8) The condition mentioned in 
paragraph (7) is that the lender's mean repayment
date is closer to the date on which repayment is claimed than each of the
other 3 dates and the lender's “mean repayment
date” means — 
(a) the date which is found by multiplying the date of
each day of the months of April to September in the previous year by the payments
of interest due on that day, adding together the products so calculated for
all the days of those 6 months, and dividing the total of those products by
the total of all payments of interest due in those months; or

(b) a date arrived at on some other
basis which is authorised by the Board.
11 

(1) When a payment has been made to a lender
under Regulation 10(5)
on an interim claim in advance, the lender shall deliver to the Board a supplementary
statement under this Regulation and (except when 
paragraph (5) below applies) shall deliver
the statement within 4 months after the end of the period for which the claim
was made.
(2) The supplementary statement shall be
a statement correcting (or confirming) the estimate of the amount deductible
given in accordance with Regulation 10(4)
above, and shall—
(a) be based as far as possible on the amount
of relevant loan interest which actually fell due in the period covered by
the statement, and only as far as may be necessary on a revised estimate;
and
(b) be for the same period as the interim
claim in advance;and any estimate contained in the supplementary statement shall
be certified by an authorised officer of the lender as the best estimate that
can reasonably be made.
(3) If the supplementary statement shows
that the amount deductible was greater than the payment made under 
Regulation 10(5) the Board shall, if satisfied
with the statement, pay the amount of the difference to the lender by way
of supplementary payment on the claim, but if the supplementary statement
shows that the amount deductible was less than the payment made under 
Regulation 10(5) the lender shall repay the
amount of the difference to the Board with the statement.
(4) If in respect of an interim claim on
which a payment has been made under Regulation
10(5) a lender fails to deliver a supplementary
statement within the time required by this Regulation, the amount of the payment
shall immediately be recoverable by the Board in the same manner as tax charged
by an assessment on the lender which has become final and conclusive.
(5) Where the lender debits interest in arrear
to a borrower's account in its records and at intervals of more than a month
the supplementary statement shall, if this date is later than the date in 
paragraph (1) above, be delivered not later
than 5 months after the end of the month in which interest is so debited.

12 

(1) An interim claim for a period allowed
by paragraph (2)
may be made by a lender within 6 months after the end of the period for which
it is made.
(2) The period for which a claim may be made
under this Regulation shall be one which:—
(a) is not shorter than 1 calendar month;

(b) falls within the lender's same financial
year; and
(c) does not include any part of a period
in respect of which a payment was made under 
Regulation 10(5) (unless the payment in respect
of the period or that part was recovered under 
Regulation 11(4)).
(3) A claim under this Regulation may not
be based on an estimate but may only be made to recover the amount deductible
in respect of interest which fell due in the period.
(4) If the amount claimed is established
to the Board's satisfaction they shall pay the amount to the claimant; if
they are not so satisfied they shall pay to the claimant any lesser amount
established to their satisfaction.
13 

(1) An annual claim for the lender's financial
year may not be made at any time more than 6 years after the end of the financial
year.
(2) Except where in relation to any financial
year a lender repays all the payments made to it on relevant interim claims,
it shall within 1 year after the end of the financial year make an annual
claim to establish the amount deductible for that financial year.In this Regulation `relevant interim
claim' means, in relation to a financial
year, an interim claim for a period falling wholly or partly within that financial
year.
(3) The annual claim shall, unless the lender
makes an election under paragraph (4),
include only the tax deducted from interest payments made by borrowers during
the financial year to which the claim relates and may not be based on an estimate.

(4) Where however a loan is secured on a
freehold or leasehold estate in respect of property in relation to which the
loan is made, the lender may in respect of any such loan elect to include
in an annual claim the amount of tax deductible in respect of interest payments
due from the borrower in the year, but always excluding amounts of tax deductible
in respect of interest written off as a bad debt in the accounts of the lender
for the financial year to which the claim relates.
(5) 
(a) Where in a tax year before the passing
of the Act imposing tax for that year any deduction has been made in accordance
with section 26
from a payment of interest at a rate in excess of the rate of tax ultimately
so imposed, the lender may include in his annual claim the amount of the excess
not recovered where—
(i) the loan has been repaid before the passing
of the said Act, and
(ii) the lender has not been able to recover
from the borrower the excess so deducted by the end of its financial year
or within 6 months of the deduction whichever is the later.
(b) The amount included in respect of the
excess shall be repaid to the lender by the Board as if it were an amount
deductible from relevant loan interest in accordance with 
section 26 and the Board shall be entitled
to recover from the borrower the amount so repaid in the same manner as tax
charged by an assessment on the borrower which has become final and conclusive.

(6) An annual claim shall bring into account
payments made on relevant interim claims, and shall apportion as may be necessary
any payment made on such a claim for any period falling partly in a different
financial year; and for the purpose of this Regulation the 
“aggregate of the relevant interim payments” means the aggregate of the payments made (and not repaid) on relevant
interim claims but excluding any part of a payment relating to a different
financial year.
(7) Where the aggregate of the relevant interim
payments shown by an annual claim exceeds the amount deductible for the financial
year shown on the claim, the lender shall repay the amount of the excess to
the Board with the claim.
(8) If a lender fails to make an annual claim
required under paragraph (2)
within the time limited by that paragraph, the Board may issue a notice to
the lender showing the aggregate of the relevant interim payments for the
year, and stating that the Board are not satisfied that the amount due to
the lender for the year exceeds the lower amount stated in the notice.
(9) If an annual claim is not delivered to
the Board within 14 days after the issue of such a notice under 
paragraph (8) the amount of the difference
between the aggregate and the lower amount stated in the notice shall immediately
be recoverable by the Board in the same manner as tax charged by an assessment
on the lender which has become final and conclusive.
(10) Where an annual claim has been made
and the lender subsequently discovers that an error or mistake has been made
in the claim the lender may make a supplementary annual claim within the time
allowed in paragraph (1).

14 

(1) 
Section 42 of the Taxes Management
Act 1970 shall not apply to claims under these
Regulations.
(2) No appeal shall lie from the Board's
decision on an interim claim.
(3) An appeal shall lie to the Special Commissioners
from the Board's decision on an annual claim, and the appeal shall be brought
by giving written notice to the Board within 30 days of receipt of written
notice of the decision.
(4) No payment or repayment made or other
thing done on or in relation to an interim claim or a notice under 
Regulation 13(8) shall prejudice the decision
on an annual claim.
(5) Part V
of the Taxes Management Act 1970
(appeals and other proceedings) shall apply to an appeal under 
paragraph (3) above, and on an appeal the Special
Commissioners may vary the decision appealed against whether or not the variation
is to the advantage of the appellant.
(6) All such assessments, payments and repayments
shall be made as are necessary to give effect to the Board's decision on an
annual claim, or to any variation of that decision on appeal.
(7) Claims and supplementary statements under
these Regulations shall be in such form and contain such particulars as the
Board prescribe and shall be signed by an authorised officer of the lender;
and forms prescribed for annual claims may require a report to be given by
the lender's auditor.
(8) Where for the purposes of an annual claim
for a financial year it is necessary to apportion any amount included in an
interim claim for a period falling partly within and partly outside that financial
year, the apportionment shall be made in such manner as the Board may prescribe.

15 
A lender shall, at his request, provide the borrower with a certificate
showing in respect of a tax year the amount of relevant loan interest due
from and paid by the borrower and the amount of tax deducted from that interest.

16 
The Board may by notice in writing require any person who is a
party to a loan agreement to which section 26
 applies, or could in the opinion of the Board
apply, to furnish them, within such time (not being less than 14 days) as
may be provided by the notice, such information (including copies of any relevant
documents or records) as they may reasonably require for the purposes of 
section 26 or Schedule 7.

17 

(1) Every person to whom payments of interest
are made in respect of which a repayment claim is made by a lender under these
Regulations shall, whenever required to do so, make available for inspection
by an officer of the Board authorised for that purpose all such books, documents
and other records in his possession or under his control containing information
relating to:—
(a) such interest and the terms of the loans
(including relevant contracts or deeds) under which such interest is paid
or,
(b) the persons holding such contracts or
deeds or paying such interestas may reasonably be required for determining whether the amount
for which any such claim is made is properly recoverable.
(2) Where records are maintained by computer
the person required to make them available for inspection shall provide the
officer making the inspection with all facilities necessary for obtaining
information from them.
(3) 
(a) Every notice given to it by the borrower
under paragraph 7(1)(a) of Schedule 7
shall be preserved by the lender to whom it is given and in such manner as
may be approved by the Board, so as to be available for inspection under this
Regulation, until two years after the termination of the loan or, if earlier,
the date from which the interest ceases to be relevant loan interest;
(b) a copy of the notice shall on its written
request be made available to the Board.
18 
At the end of the second column of the Table in 
section 98 of the Taxes Management
Act 1970 (penalty for failure to furnish information
etc) there shall be inserted“
Regulations 16
and 17 of the Income
Tax (Interest Relief) Regulations 1982
”.

19 
An appeal by a borrower shall lie to the General Commissioners
except that the borrower may elect (in accordance with 
section 46(1) of the Taxes Management
Act 1970) to bring his appeal before the Special
Commissioners—
(a) from the Board's decision on his application
under Regulation 3(3);

(b) from a notice issued to him by the Board
under paragraph 7(1)(b) of Schedule 7
(notice that interest may be paid under deduction of tax); and
(c) from a notice issued to him by the Board
under paragraph 10 of Schedule 7
(notice that interest is not relevant loan interest).
(2) An appeal shall be brought by giving
written notice to the Board within 30 days of the receipt by the borrower
of the Board's decision or the notice as the case may be.
(3) Part V
of the Taxes Management Act 1970
(appeals and other proceedings) shall apply to an appeal under this Regulation,
and on an appeal the General or Special Commissioners may vary the decision
or notice appealed from whether or not the variation is to the advantage of
the appellant.
(4) All such assessments, payments or repayments
shall be made by the inspector as are necessary to give effect to the Board's
decision or notice or to any variation of that decision or notice on appeal.

(5) The Taxes
Management Act 1970 shall apply to an assessment
made by the inspector to give effect to a notice issued by the Board under
the said paragraph 10 of Schedule 7
as if it were an assessment to tax for the tax year in which the relief, to
which the notice refers, was given and as if—
(a) the assessment were among those specified
in sections 55(1) (recovery
of tax not postponed) and 86(2) (interest
on overdue tax) of that Act; and
(b) the sum charged by the assessment were
tax specified in paragraph 3
of the Table in section 86(4)
of that Act (reckonable date).
(6) Without prejudice to the provisions of 
sections 36, 37
and 39 of the Taxes
Management Act 1970 (extended time limit for
fraud etc.) an assessment made under paragraph
(5) shall not be out of time under 
section 34 of that Act (ordinary time limit
of six years) if it is made before the end of the chargeable period following
that in which the Board's notice was issued.
D.B. Rogers
J.D. Taylor Thompson
Two of the Commissioners of Inland Revenue
31st August 1982