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K Moorthy v HMRC

In K Moorthy v HMRC [2018] EWCA Civ 847 (20 April 2018) the Court of Appeal found that damages awarded for injury to feelings resulting from the discrimination of an employee fell within the scope of ITEPA 2003 s 406.

Mr Moorthy had entered into a compromise agreement in relation to a claim for unfair dismissal and unlawful age discrimination. Under the agreement Mr Moorthy had accepted payment of ‘an ex gratia sum of £200 000 by way of compensation for loss of office and employment’ in ‘full and final settlement’ of his claim. The issue was whether the payment (or part of it) was subject to income tax under ITEPA 2003 s 401(1)(a) as a payment received ‘in consideration or in consequence of or otherwise in connection with’ the termination of his employment; and if so whether it was taken out of the scope of...

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