In P Bovey v HMRC (TC01920 – 12 April) a senior civil servant (B) retired in April 2007. In December 2007 he received a bonus payment of £6 500 from which tax was deducted. In his tax return he claimed that this should be treated as a compensation payment within ITEPA 2003 s 401 qualifying for relief under s 403. HMRC issued a closure notice ruling that the payment constituted earnings within s 62 and did not qualify for relief. The First-tier Tribunal dismissed B’s appeal against this decision.
Why it matters: The First-tier Tribunal upheld HMRC’s view that although the appellant did not receive the bonus payment until after he had retired it was still a payment of ‘earnings’ within ITEPA 2003 s 62 and remained chargeable to income tax. The Tribunal rejected the appellant’s...
