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26 November 2008
Issue: 4186 / Categories: Forum & Feedback
A UK executive is seconded to the USA, but subsequently decides to return to the UK and is made redundant. A termination payment is made, but is this taxable under ITEPA 2003, s 62 or s 401? The replies examine the factors that need to be taken into account in confirming that the payment is not contractual.

A UK executive domiciled and resident in the UK was employed by the UK subsidiary of a US parent. He went to work for the US parent for three years with the condition that the UK employment contract was not ended and he had the right to terminate the US agreement and return to work in the UK on his old terms which included a clause that either party could terminate the agreement by giving 18 months notice.

For family reasons he exercised the above option. However before he came back to the UK it was decided at board level that the main operation in the UK would be moved to Switzerland and UK staff would be made redundant. In addition his UK post was already filled by another executive and therefore there was no job for him in the UK. As...

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