A company had a profit-sharing scheme for its employees. When it decided to merge with a larger company, the trustees concluded that the scheme was no longer viable. They wound it up and distributed the funds among the employees.
Held: The distributions to the employees were taxable as profits from employment.
Lord Kilbrandon rejecting an argument that the payment had nothing to do with employment. He said: ‘Certainly the money forming the payment became available in consequence of certain events and decisions connected with the structure of the company. But the sole reason for making the payment to the [taxpayer] was that he was an employee, and the payment arose from his employment. It arose from nothing else, as it would have done, if for example, it had been made to an employee for some compassionate reason.’
Judges:
Lord Wilberforce, Lord Diplock, Lord Simon of Glaisdale, Lord Kilbrandon, Lord Edmund-Davies
Citations:
[1976] UKHL 7, [1976] 3 All ER 636, [1976] 1 WLR 1096
Links:
Jurisdiction:
England and Wales
Cited by:
Cited – RFC 2012 Plc (Formerly The Rangers Football Club Plc) v Advocate General for Scotland SC 5-Jul-2017
The Court was asked whether an employee’s remuneration is taxable as his or her emoluments or earnings when it is paid to a third party in circumstances in which the employee had no prior entitlement to receive it himself or herself.
Held: The . .
Lists of cited by and citing cases may be incomplete.
Income Tax
Updated: 15 August 2022; Ref: scu.248619
