Taxability of compensation paid on compromise of claims after dismissal. The employer introduced new terms, withdrawing car benefits. Having refused the new terms the taxpayer was dismissed. A tribunal held him unfairly dismissed. The council re-instated him and others and made a compensatory payment. The Revenue contended that the re-instatement made the payment taxable.
Held: The cases of Hochstrasser and Wilmshurst set the test for what wa staxable pay. This payment resulted from a negotiated settlement, and was directly consequential of the dismissal and finding of unfair dismissal. The payment was not taxable because it was under andpound;30,000.
Judges:
The Honourable Mr Justice Patten
Citations:
[2004] EWHC 898 (Ch), Times 07-Jun-2004, Gazette 13-May-2004, [2004] STC 1022
Links:
Statutes:
Income and Corporation Taxes Act 1988 148
Jurisdiction:
England and Wales
Citing:
Applied – Shilton v Wilmshurst HL 7-Feb-1991
The taxpayer was transferred from one football club to another. He was paid andpound;75,000 to persuade him to move. The revenue appealed a decision that this was not a sum taxable as an emolument under Schedule E by the new employer.
Held: . .
Cited by:
Appeal from – Wilson (HM Inspector of Taxes) v Clayton CA 7-Dec-2004
The claim against the defendant at the tribunal had been settled by a compromise which had then been the subject of an order by the tribunal. The Revenue sought to charge the payment to income tax.
Held: It had been paid ‘in connection with’ . .
Lists of cited by and citing cases may be incomplete.
Income Tax, Employment
Updated: 10 June 2022; Ref: scu.196104
