The definition of interest has been the subject of much judicial interpretation over the years. In Westminster Bank Ltd v. Riches (28TC159), Lord Wright observed

‘…the essence of interest is that it is a payment which becomes due because the creditor has not had his money at the due date. It may be regarded either as representing the profit he might have made if he had had the use of the money, or, conversely the loss he suffered because he had not had that use. The general idea is that he is entitled to compensation for the deprivation.’

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