Commentary on Sections Overview Overview Section 878: Interest paid by banks
2657.This section provides an exception from the duty to deduct under this Chapter for interest paid by a bank in the ordinary course of its business. It is based on section 349(3) and (3AA) of ICTA.
2658.But this does not override any duty to deduct under Chapter 2 of this Part.
2659.Broadly, all interest is paid in the ordinary course of its business (see subsection (1)) unless:
	the borrowing relates to the capital structure of the bank; or
	the characteristics of the transaction giving rise to the interest are primarily attributable to an intention to avoid United Kingdom tax.
See in particular Statement of Practice 4/96.