I was interested to read the article by Nigel Doran and Philip Swinburn on Charman [2020] UKUT 253 (‘Charman: old CRS law, new insights’, Tax Journal, 25 September 2020). I was particularly attentive to the second part of the article in which they express their views on the distinction between a profit ‘from’ an employment and receiving something ‘by reason of’ employment – a topic I also examined in this journal (‘The fine line between employment-related securities and shares from employment’, Tax Journal, 18 September 2020).
It’s fair to say that Nigel and Philip place rather less emphasis than I do on the distinction that the higher courts have historically held to exist (a distinction that was explicitly recognised by the Upper Tribunal in Charman), and rather more on the reservations tentatively expressed by Carnwath J in Wilcock v Eve [1995] STC 18. But to say, with them, that this is now reduced to an ‘alleged’ distinction that Carnwath J ‘had done much to lay to rest’ and that is now ‘staging a revival’ might be thought by some to risk over-stating the case.
However that may be, there remains one very important point to bear in mind when considering the distinction. It is that there is nothing in the earnings charge under s 62 that replicates the deeming provisions that appear in s 471(3) (as regards ‘employment-related securities’) and in s 201(3) and elsewhere (as regards ‘benefits in kind’). To that extent, the scope for a charge to tax to exist on something as being (deemed to be) ‘by reason of’ employment is undoubtedly wider than being ‘from’ the employment. This, despite the suggestions of the First-tier Tribunal in Vermilion Holdings [2019] UKFTT 230 (later neatly side-stepped by the Upper Tribunal) as to the supposed limitation of the deeming provision. n
I was interested to read the article by Nigel Doran and Philip Swinburn on Charman [2020] UKUT 253 (‘Charman: old CRS law, new insights’, Tax Journal, 25 September 2020). I was particularly attentive to the second part of the article in which they express their views on the distinction between a profit ‘from’ an employment and receiving something ‘by reason of’ employment – a topic I also examined in this journal (‘The fine line between employment-related securities and shares from employment’, Tax Journal, 18 September 2020).
It’s fair to say that Nigel and Philip place rather less emphasis than I do on the distinction that the higher courts have historically held to exist (a distinction that was explicitly recognised by the Upper Tribunal in Charman), and rather more on the reservations tentatively expressed by Carnwath J in Wilcock v Eve [1995] STC 18. But to say, with them, that this is now reduced to an ‘alleged’ distinction that Carnwath J ‘had done much to lay to rest’ and that is now ‘staging a revival’ might be thought by some to risk over-stating the case.
However that may be, there remains one very important point to bear in mind when considering the distinction. It is that there is nothing in the earnings charge under s 62 that replicates the deeming provisions that appear in s 471(3) (as regards ‘employment-related securities’) and in s 201(3) and elsewhere (as regards ‘benefits in kind’). To that extent, the scope for a charge to tax to exist on something as being (deemed to be) ‘by reason of’ employment is undoubtedly wider than being ‘from’ the employment. This, despite the suggestions of the First-tier Tribunal in Vermilion Holdings [2019] UKFTT 230 (later neatly side-stepped by the Upper Tribunal) as to the supposed limitation of the deeming provision. n
