In HMRC v J Martin [2014] UKUT 0429 (22 September 2014) the Upper Tribunal found that a bonus repayment by an employee constituted ‘negative earnings’.
Mr Martin was an employee of JLT Risk Solutions (JLT) when the company decided that he should be induced to enter into a new employment contract which would include a mechanism to tie him in. This was achieved with the payment of a £250 000 bonus on entering into the new contract together with an obligation to make repayment in certain cases of termination of employment – on a time apportioned basis over a five year period. The bonus was treated as an emolument subject to PAYE and NIC so that Mr Martin received a net sum of £147 500.
Mr Martin resigned from the company a few months later becoming liable to the sum of £162 500.
The first issue was whether the...
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