In Sabaratnam Devaraj v HMRC (TC03834 – 22 July 2014) the FTT held that a payment made for goodwill was not deductible from a termination payment.
HMRC had disallowed the deduction of a sum paid for goodwill on the acquisition of a post office from a payment made by Post Office Ltd on the closure of that post office. The post office was compulsorily closed under Post Office Ltd’s ‘network reinvention progamme’.
It was accepted that the payment by Post Office Ltd was employment income so that the first £30 000 was exempt from income tax (ITEPA 2003 s 403(1)). The FTT therefore observed that any set-off must be of an income nature.
The only deductions allowable are set out in ITEPA 2003 s 336(1) and refer to expenses ‘incurred wholly exclusively and necessarily in the performance of the duties of employment’. However the payment made...
