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Termination payments: a reality check?

Alasdair Friend (Baker & McKenzie) reviews the recent cases of M Phillips and Tottenham Hotspur Ltd, which represent a reality check against too broad an interpretation of when termination payments flow ‘from’ an employment contract. 
 
The recent case of Tottenham Hotspur Ltd v HMRC [2016] UKFTT 389 (TC) following shortly after the case of M Phillips v HMRC [2016] UKFTT 174 (TC) decided in March this year adds further weight to arguments that payments made in abrogation of employment contracts are not earnings ‘from’ the employment. As such the payments made in these cases to employees on termination of their employment have been found not to be taxable under ITEPA 2003 s 62. Instead such payments have been found to have been paid solely as a result of the termination of the employment relationship; as such they are taxable under ITEPA 2003...

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