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HMRC v Knowledgepoint 360 Group Ltd

In HMRC v Knowledgepoint 360 Group Ltd (Upper Tribunal – 2 April) an employee benefit trust made payments to certain employees in 2003/04. HMRC issued a ruling that Class 1 national insurance contributions were due on the payments. The Upper Tribunal upheld HMRC’s ruling disapproving the Special Commissioners’ decision in Channel 5 TV Group Ltd v Morehead [2003] STC (SCD) 327 and holding that the essential feature of a gratuity was ‘that it is a token of thanks for the services provided directly and personally to the donor’. A voluntary payment ‘by a third party who has received an indirect benefit from the provision of the employee’s services’ did not amount to a gratuity.

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Why it matters: The Upper Tribunal allowed HMRC’s appeal against the First-tier decision and specifically disapproved the Special Commissioners’ decision in Channel 5 TV Group Ltd...

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