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S Mathur v HMRC

In S Mathur v HMRC [2022] UKFTT 88 (TC) (9 March 2022) the First-tier Tribunal (FTT) dismissed the appellant’s appeal and held that the disputed settlement payment was received in consequence of or otherwise in connection with the termination of her employment and was accordingly chargeable to income tax as employment income in accordance with ITEPA 2003 s 403.

The taxpayer (M) had been dismissed from her position with a bank for alleged misconduct and was offered £82 135 in compensation which she refused. M took the matter to the employment tribunal but eventually reached a settlement under which she received £6m. PAYE was applied to all but £30 000.

M’s contention before the FTT was that the settlement payment arose from negotiations based on the discrimination and victimisation she had experienced during her employment with the bank and the wish of the bank to avoid the embarrassment of publicity....

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