USA or UK liability?
The taxpayer S ceased work for British Airways on 31 March 2000 and received a termination payment of £93 000 on 1 April 2000 as a payment in lieu of notice. £30 000 was exempt and tax was deducted from the balance at 23%. The taxable element was declared on the 1999-2000 self assessment tax return and a balancing payment of £10 500 was due in respect of higher rate liability.
On 17 October 2000 S emigrated to the USA and was treated as resident there during 2000 and paid US tax on the termination payment. S claimed that he was exempt from UK tax on the termination payment under the UK-USA double taxation agreement.
The Commissioner found that the payment was clearly taxable in the UK under TA 1988 s 148. It was also found that on 1 April 2000 ...
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