Darren Oswick and Matthew Norris (Simmons & Simmons) review a recent decision which suggests that insufficient attention has been paid to the ‘profit’ element of the earnings definition.
In Murphy v HMRC [2021] UKUT 152 the Upper Tribunal (UT) held that the part of a payment under a settlement agreement made by an employer directly to employees’ advisers representing a success fee and to an insurance company representing employees’ insurance costs was not earnings for tax purposes. The amounts paid by the employer did not fall to be taxed as ‘profit’ for the purposes of ITEPA 2003 s 62(2)(b).
The decision highlights the fact that a payment which does not fall within s 62(2)(a) as ‘salary’ or ‘wages’ must not only be ‘from’ the employment but also must represent a ‘profit’ in the hands of the employee rather than a reimbursement of the employee’s necessary costs. To fall within...
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Darren Oswick and Matthew Norris (Simmons & Simmons) review a recent decision which suggests that insufficient attention has been paid to the ‘profit’ element of the earnings definition.
In Murphy v HMRC [2021] UKUT 152 the Upper Tribunal (UT) held that the part of a payment under a settlement agreement made by an employer directly to employees’ advisers representing a success fee and to an insurance company representing employees’ insurance costs was not earnings for tax purposes. The amounts paid by the employer did not fall to be taxed as ‘profit’ for the purposes of ITEPA 2003 s 62(2)(b).
The decision highlights the fact that a payment which does not fall within s 62(2)(a) as ‘salary’ or ‘wages’ must not only be ‘from’ the employment but also must represent a ‘profit’ in the hands of the employee rather than a reimbursement of the employee’s necessary costs. To fall within...
If you or your firm subscribes to Taxjournal.com, please click the login box below:
If you do not subscribe but are a registered user, please enter your details in the following boxes:
