If I have correctly understood Tim Gibbons’ observation, where the question is covered in the text books, the case of Re Morley’s Estates, Hollenden v. Morley [1937] 3 All ER 204 is normally cited in support of the general principle that distributions are treated as being appropriated first to the interest accrued at the date of distribution and then, to the extent of any balance, to the principal amount of the legacy. So far as I am aware, HMRC will raise assessments reflecting this principle.
Paul Saunders