Updated: December 2018
1. Designated Deposit Account
If client monies are held in a separate designated deposit account (i.e. a specific bank account, for a specific matter) all interest earned on that account will be credited to that bank account and paid to the client in full (subject to any applicable withholding tax).
2. General Client Account - Client monies will normally be held in general client bank accounts, in which amounts for different matters and clients are pooled.
3. Interest will not be paid to you in the following circumstances:
• if the total amount of interest calculated over the course of a transaction is less than £20, no interest will be paid;
• no Interest will not be paid on money held for the payment of a professional disbursement, if counsel etc. has requested a delay in settlement;
• on any advance from us to you in our general client account to fund a payment on your behalf;
• other than as may be required by the rules of professional practice; or
• if there is an agreement between us to contract out of the payment of interest.
4. Where interest is payable in General Client Accounts
A sum in lieu of interest will be payable (subject to any applicable withholding tax) on amounts held in general client bank accounts on the following basis:
• Interest will be calculated daily on the balance held for each individual matter, and compounded on a six monthly basis, and paid to you when the matter has been concluded.
• client monies will normally be held in an instant access bank account to facilitate transactions, however if specific instructions are received from the client requesting that funds be placed on a term deposit, interest earned on such term deposits shall be paid to the client in full
5. In calculating interest we apply a rate that we believe reflects the market rate of interest on an instant access account offered by our bank HSBC, over the period that the interest is due.
6. We will review interest rates quarterly and also whenever the Bank Of England changes its bank rate.
7. If funds are held in a Designated Deposit Account, we will negotiate with the bank to obtain the best available interest rate.
8. Periods applicable for interest calculations:
• the period between the date when the relevant funds were first received by us and clear into client account;
• if we send funds electronically, the date when the funds are sent; or
• if we send funds by cheque 5 days after a cheque is raised.
9. Interest on funds held in our general client account is paid without any deduction of tax (unless you are resident overseas as noted below). It is therefore your responsibility to inform HMRC of any amounts of interest you receive from us.
When funds are held in a separate designated client account, interest is usually paid net of tax unless you have signed a declaration confirming your entitlement to receive bank interest gross.
10. The European Savings Directive regulations 2003/48/EC requires us to inform HMRC of payments of interest to relevant payees and residual entities in prescribed territories. Where you reside outside the UK and EU, we are required to deduct income tax at the current basic rate and account for this interest to HMRC directly and pay you the net amount.