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Instead of making a redundancy payment of £70,000, an employer has apparently overpaid by £30,000
Our client was made redundant from her employment in 2010/11. As part of the compromise agreement she was entitled to receive £70 000 of which £30 000 was tax-free. This amount was paid by the employer in two payments:
- £30 000 paid tax-free.
- £70 000 of which £30 000 was also paid tax-free.
As can be seen our client was paid £100 000 in total and was in effect overpaid by £30 000. When our client completed her self-assessment tax return she declared £70 000 ie the amount she should have received according to the compromise agreement. HMRC have enquired into the return presumably because her former employer has reported the higher (actual amount paid) figure.
As part of the enquiry HMRC wrote to our client’s former employer. Despite the agreement they...
