Crompton v Revenue & Customs [2009] UKFTT 71 (TC) (07 April 2009)

Crompton v Revenue & Customs [2009] UKFTT 71 (TC) (07 April 2009)

The compensation payment was not connected with the termination of Mr Crompton's employment but was paid for procedural failings in selection for posts; therefore, it does not fall within section 401(1)(a) of ITEPA 2003 and is not taxable as employment income.

Citation
[2009] UKFTT 71
Parties
Appellant: Thomas John Crompton; Respondents: Her Majesty's Commissioners of Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
07 April 2009
Procedural Posture
Income Tax Appeal / First Tier Tribunal (tax), Decision
Outcome
Appeal allowed
Legal Topics
Income Tax, Compensation Payments, Termination of Employment, Taxation of Employment Income
Tax Law Employment Law Income Tax Compensation Payments Termination of Employment Taxation of Employment Income

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Parties

Thomas John Crompton

Appellant

Her Majesty's Commissioners of Revenue and Customs

Respondents

Procedural Posture

Income Tax Appeal / First Tier Tribunal (tax), Decision

Legal Issues

  1. 1 Whether the compensation payment to Mr Crompton falls within section 401(1)(a) of the Income Tax (Earnings and Pensions) Act 2003 as a payment connected with the termination of employment

Ratio Decidendi

The compensation payment was not connected with the termination of Mr Crompton's employment but was paid for procedural failings in selection for posts; therefore, it does not fall within section 401(1)(a) of ITEPA 2003 and is not taxable as employment income.

Court Disposition

Appeal allowed

Orders

  • Mr Crompton should not be taxed on the compensation payment.
  • Either party may apply for a further hearing if residual calculation issues arise.