Orme v Revenue & Customs [2011] UKFTT 618 (TC) (07 September 2011)

Orme v Revenue & Customs [2011] UKFTT 618 (TC) (07 September 2011)

The compensation payment received by the appellant on closure of the sub post office was correctly assessed as compensation for loss of office under Section 401 ITEPA, with only the first £30,000 exempt under Section 403 ITEPA. The appellant held an office, not merely a trade, and the payment was not to be included in business profits. HMRC validly opened the enquiry upon discovery of the incorrect treatment.

Citation
[2011] UKFTT 618 (TC)
Parties
Appellant: Mrs Ruth Orme; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
07 September 2011
Procedural Posture
Tax Appeal / First Tier Tribunal Decision
Outcome
Appeal dismissed
Legal Topics
Income Tax, Compensation for Loss of Office, Self Assessment, Taxable Income, Section 401 ITEPA, Section 403 ITEPA
Tax Law Income Tax Compensation for Loss of Office Self Assessment Taxable Income Section 401 ITEPA Section 403 ITEPA

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Parties

Mrs Ruth Orme

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

Tax Appeal / First Tier Tribunal Decision

Legal Issues

  1. 1 Whether compensation payment to sub-postmistress on closure of sub post office is taxable under Section 401 ITEPA
  2. 2 Whether HMRC correctly assessed the payment as compensation for loss of office
  3. 3 Whether the enquiry into the tax return was validly opened

Ratio Decidendi

The compensation payment received by the appellant on closure of the sub post office was correctly assessed as compensation for loss of office under Section 401 ITEPA, with only the first £30,000 exempt under Section 403 ITEPA. The appellant held an office, not merely a trade, and the payment was not to be included in business profits. HMRC validly opened the enquiry upon discovery of the incorrect treatment.

Court Disposition

Appeal dismissed