Bank compensation for the mis-selling of interest rate hedging products received by the taxpayers as basic redress and interest payments was property and investment income, respectively.  

The appellants (brothers) ran a property rental business. In January and May 2006, the appellants jointly purchased two interest rate hedging products (IRHPs) from HSBC. In August 2006, the appellants jointly purchased an IRHP from RBS. In a document dated 17 January 2014, RBS calculated interest at that stage of £59,030.01. However, on 20 October 2016, HM Revenue and Customs (HMRC) wrote to the appellants indicating the gross interest figure was £65,173.76. The appellants disputed the principle of chargeability to tax (but not the figure of £65,173.76). HMRC subsequently issued closure notices amending each appellant’s self-assessment returns for the tax year 2014/15, relating to the chargeability to income tax said to be due on: (a) &lsquo