Revenue and Customs v Forde and McHugh Ltd: SC 26 Feb 2014

The Court heard a number of appeals concerned with the interpretation of the phrase in section 6(1) of the Social Security Contributions and Benefits Act 1992, ‘[w]here in any tax week earnings are paid to or for the benefit of an earner’ It was asked as to the meaning of ‘earnings’ in that phrase The context is the payment of an employer’s contribution to a Funded Unapproved Retirement Benefits Scheme Until 2006 such schemes were commonly used to top up sums available through tax-approved pension schemes.
Held: The company’s appeal succeeded. The contributions made by it into a funded unapproved retirement benefits scheme in favour of one of its directors were not a part of the director’s ‘earnings’ for the purposes of section 6(1) of the 1992 Act and the company did not have to to pay national insurance contributions on the value of the contribution.

Lord Neuberger, President, Lord Sumption, Lord Reed, Lord Toulson, Lord Hodge
[2014] UKSC 14, [2014] STI 739, [2014] 1 WLR 810, [2014] WLR(D) 99, UKSC 2012/0162, [2014] Pens LR 203, [2014] 2 All ER 356, [2014] STC 724, [2014] ICR 403, [2014] BTC 8
WLRD, Bailii, Bailii Summary, SC, SC Summary
Social Security Contributions and Benefits Act 1992
England and Wales
CitedTennant v Smith (Surveyor of Taxes) HL 14-Mar-1892
A Montrose bank manager had been given free accommodation in a bank house which he was required to occupy.
Held: The Inland Revenue could not charge income tax on the value of the accommodation because the employee could not convert the . .
CitedAbbott v Philbin (Inspector of Taxes) HL 21-Jun-1960
A company’s senior employees had been given an option to subscribe for its shares at the then current market price, the option being exercisable at any time within the next ten years. The employees were thus incentivised to increase the company’s . .
CitedHeaton v Bell HL 1970
The Revenue sought to tax the benefit of a car loan scheme and the issue was whether the emoluments of a participating employee fell to be assessed under Schedule E gross without reference to the weekly sum deducted by the employer for providing, . .
CitedDepositors’ Protection Board v Dalia HL 20-May-1994
The House was asked as to the meaning of the word ‘depositor’. Regulations were prayed in aid which were made four years after the date of the enactment.
Held: The protection given by the Depositor Protection Scheme does not extend to . .
CitedHanlon v The Law Society HL 1981
The House considered the impact of the statutory charge under the 1974 Act in matrimonial proceedings.
Held: The costs in respect of which the statutory charge bit were the costs of the whole divorce proceedings and not just the financial . .
At UTTCForde and McHugh v HM Reveue and Customs UTTC 21-Feb-2011
NATIONAL INSURANCE CONTRIBUTIONS – contribution to FURBS – whether liable for Class I contributions – no – appeal allowed. . .
Appeal fromHM Revenue and Customs v Forde and McHugh Ltd CA 30-May-2012
Sums paid by an employer, other than out of an employee’s salary, which were to provide contingent benefits to an employee, did not fall within the charge to NICs on earnings before the occurrence of the contingency and the payment of the benefits. . .

Cited by:
CitedRFC 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, Benefits

Leading Case

Updated: 01 November 2021; Ref: scu.521991