Contractual obligation to repay bonus received in previous tax year
In J Martin v HMRC (TC02460 – 24 January) an employee (M) had signed an agreement to remain with his employer (J) for five years in return for a payment of £250 000. The agreement provided that if M left his employment within the five-year period he would be required to repay a proportion of the bonus. The £250 000 was treated as taxable earnings of 2005/06. In December 2006 M resigned from his employment and became liable to repay J £162 500. J initially claimed that this amount should be deducted from his taxable earnings for 2005/06 but subsequently claimed that it should be treated as ‘negative taxable income’ for 2006/07. HMRC rejected the claims and M appealed. The First-tier Tribunal (FTT) allowed his appeal holding that the full amount of £250 000...
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Contractual obligation to repay bonus received in previous tax year
In J Martin v HMRC (TC02460 – 24 January) an employee (M) had signed an agreement to remain with his employer (J) for five years in return for a payment of £250 000. The agreement provided that if M left his employment within the five-year period he would be required to repay a proportion of the bonus. The £250 000 was treated as taxable earnings of 2005/06. In December 2006 M resigned from his employment and became liable to repay J £162 500. J initially claimed that this amount should be deducted from his taxable earnings for 2005/06 but subsequently claimed that it should be treated as ‘negative taxable income’ for 2006/07. HMRC rejected the claims and M appealed. The First-tier Tribunal (FTT) allowed his appeal holding that the full amount of £250 000...
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