天美影院

Voluntary payments are not interest

Since interest can only accrue by virtue of some right, a voluntary or gratuitous payment cannot be interest, even if it is expressed as in lieu of or 鈥榚quivalent to half the interest鈥�, as in the case of Seaham Harbour Company v. Crook (16TC333). J Rowlatt鈥檚 comment that

鈥渋nterest or an annual sum which is paid really benevolently each time is merely an allowance, and not taxable at all鈥�

is a reflection of that common-law principle.

Truly voluntary payments are likely to be rare. For instance where compensation is paid, labels such as 鈥榚x gratia鈥� may only mean that the payer settled out of court, or 鈥榳ithout admitting liability鈥�. Such a payment is not voluntary or gratuitous if made in consideration of the claimant giving up the right to take proceedings for the damage suffered. See SAIM2330 for more on compensation or damages generally.