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HMRC v KG Colquhoun

In HMRC v KG Colquhoun (Upper Tribunal – 6 December) an individual (C) had worked for many years for a company (B) which had a contractual redundancy scheme. In 1996 B decided to phase out its contractual redundancy scheme and paid C £33 148 as compensation. B only deducted tax from £3 148 of this payment. In 2005 C was made redundant. He received a redundancy payment and a payment in lieu of notice. In his tax return he treated £30 000 of the payment as exempt from tax under ITEPA 2003 s 403(1). HMRC issued an amendment denying the exemption on the grounds that the exemption had been exhausted by the payment which C had received in 1996.

The First-Tier Tribunal allowed C’s appeal but the Upper Tribunal reversed this decision and upheld HMRC’s amendment holding that ‘a payment made to satisfy a contingent...

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