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Special reduction

30 June 2014
Issue: 4458 / Categories: Tax cases , Employees , Income Tax

F Berrier (TC3584)

The taxpayer started work at an international securities broker in 2009 receiving a one-off payment of £25 000 in addition to his starting salary.

He believed the sum to be a ‘golden hello’ but his statement of employment referred to it as a “forgivable loan”.

It was written off in February 2011 and the employer included it as a taxable benefit in the taxpayer’s P11D with a note telling him to include the amount in his tax return for the year.

He completed his return but did not include the loan. HMRC amended the document to include the £25 000 and imposed a penalty for carelessness.

The taxpayer appealed saying he had mentioned the sum in his 2009/10 return.

The First-tier Tribunal found that the money was a loan – which was how the employer described and reported it. The arrangement may have been a...

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