Howell v Revenue & Customs [2010] UKFTT 584 (TC) (17 November 2010)

Howell v Revenue & Customs [2010] UKFTT 584 (TC) (17 November 2010)

The £14,000 payment was made pursuant to a contractual right to salary in lieu of notice, not as damages for breach of contract. It falls within Section 62 ITEPA 2003 and is fully taxable as employment income.

Citation
[2010] UKFTT 584 (TC)
Parties
Appellant: Ms Janelle Howell; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
17 November 2010
Procedural Posture
Tax Appeal / First Tier Tribunal Decision
Outcome
Appeal dismissed
Legal Topics
Income Tax, Termination Payments, Pay in Lieu of Notice, Redundancy, Self Assessment
Tax Law Employment Law Income Tax Termination Payments Pay in Lieu of Notice Redundancy Self Assessment

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Parties

Ms Janelle Howell

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

Tax Appeal / First Tier Tribunal Decision

Legal Issues

  1. 1 Whether the £14,000 termination payment was taxable as pay in lieu of notice under Section 62 of ITEPA 2003 or exempt as compensation for breach of contract under Section 401 of ITEPA 2003

Ratio Decidendi

The £14,000 payment was made pursuant to a contractual right to salary in lieu of notice, not as damages for breach of contract. It falls within Section 62 ITEPA 2003 and is fully taxable as employment income.

Court Disposition

Appeal dismissed

Orders

  • The closure notice stands; the payment is taxable under Section 62 ITEPA 2003.
  • The Appellant is liable to repay the excess tax refunded.