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Purposive approach adopted

23 May 2011
Issue: 4305 / Categories: Tax cases , Employees , Income Tax
Deutsche Bank Group Services (UK) Ltd (TC944)

The taxpayer bank paid bonuses to employees under a scheme in which the employees were allocated sums to purchase shares.

They were given rights to sell the shares and withdraw sums from the scheme over a certain period. HMRC said the sums were earnings received by the employees before they were paid into the scheme and the bank was liable to pay income tax and secondary National Insurance on them.

The bank argued:

  • the sums were not earnings when they were paid into the scheme;
  • the shares were exempt restricted securities under ITEPA 2003 s 425;
  • although the restrictions were removed from the shares while held by or for the employees as a result of s 429 ...

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