Payments are emoluments

The taxpayer company was the employer of two employee taxpayers. It agreed to establish a joint venture – called KNDL – with another company.

Around 2 000 employees including the two employee taxpayers were transferred to KNDL and industrial action was threatened by the staff members who had been moved.

The taxpayer company eventually agreed to make payments totalling £5 000 to each employee in consideration of the loss of their pension rights; it was the status of these payments that was in dispute.

The First-tier Tribunal found the payments had been made to motivate the workers and avoid strike action. As such they were emoluments from an employment and therefore taxable.

The taxpayers appealed to the Upper Tribunal (Tax and Chancery Chamber) which dismissed the appeal.

The matter proceeded to the Court of Appeal which said there had been no misdirection of law...