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Residual Charge on Employee Benefits

Pindy Gainda and Andrea Gott Senior Associates at Herbert Smith LLP consider the First-tier Tribunal decision in Smith v HMRC [2009] UKFTT 210
Smith considered the tax treatment of gains made by an employee when he sold shares acquired under an employee incentive programme to his employer at greater than market value. Whilst the case considered legislation that is no longer on the statute books (ICTA 1988 ss 154 and 162) the decision remains interesting because the substance of s 154 has been rewritten as ITEPA 2003 Chapter 10 Part 3 and the decision therefore remains equally applicable to its successor provisions.
Section 154 broadly stipulated that a person would be subject to an income tax charge on the cash equivalent of...

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