PETER HEMINGWAY v Revenue & Customs (payment following termination of share options) [2023] UKFTT 749 (TC) (05 September 2023)

PETER HEMINGWAY v Revenue & Customs (payment following termination of share options) [2023] UKFTT 749 (TC) (05 September 2023)

The payment to the appellant was made in connection with the loss of employment-related securities options and is taxable in full under section 477 ITEPA, not section 401 ITEPA. Section 401(3) ITEPA excludes such payments from the £30,000 exemption. The closure notice was valid as the initial return was not treated by HMRC as made under section 8 TMA, and the 2019 Tribunal Decision is final and conclusive, precluding the application of section 12D TMA to validate the initial return.

Citation
[2023] UKFTT 749
Parties
Appellant: Peter Hemingway; Respondents: The Commissioners for His Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
05 September 2023
Procedural Posture
Tax Appeal / First Tier Tribunal (tax Chamber) Substantive Judgment After Hearing
Outcome
Appeal dismissed
Legal Topics
Taxation of Share Options, Employment Related Securities, Income Tax (earnings and Pensions) Act 2003, Taxes Management Act 1970, Finance Act 2019, Jurisdiction of Tax Tribunals, Closure Notices, Employment Rights and Compensation
Tax Law Employment Law Taxation of Share Options Employment Related Securities Income Tax (earnings and Pensions) Act 2003 Taxes Management Act 1970 Finance Act 2019 Jurisdiction of Tax Tribunals +2 more

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Parties

Peter Hemingway

Appellant

The Commissioners for His Majesty’s Revenue and Customs

Respondents

Procedural Posture

Tax Appeal / First Tier Tribunal (tax Chamber) Substantive Judgment After Hearing

Legal Issues

  1. 1 Whether payment following termination of share options is taxable under section 401 ITEPA (with £30,000 exemption) or under section 477 ITEPA (taxable in full)
  2. 2 Whether the closure notice issued by HMRC was valid in light of retrospective effect of section 12D Taxes Management Act 1970 and transitional provisions in Finance Act 2019

Ratio Decidendi

The payment to the appellant was made in connection with the loss of employment-related securities options and is taxable in full under section 477 ITEPA, not section 401 ITEPA. Section 401(3) ITEPA excludes such payments from the £30,000 exemption. The closure notice was valid as the initial return was not treated by HMRC as made under section 8 TMA, and the 2019 Tribunal Decision is final and conclusive, precluding the application of section 12D TMA to validate the initial return.

Court Disposition

Appeal dismissed

Orders

  • No tax relief under section 401 ITEPA; payment taxable in full under section 477 ITEPA
  • No costs order made against the appellant