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Returnable bonus

14 October 2014 / Pete Miller
Issue: 4473 / Categories: Comment & Analysis , Employees

The Upper Tribunal’s decision in Julian Martin, concerning an employment loss


  • Part of a signing bonus had to be repaid by the employee if he left his employment within a certain period.
  • HMRC appealed against the First-tier Tribunal’s decision that the amount repaid gave rise to an employment loss that could be relieved under ITA 2007 s 128.
  • The Upper Tribunal considered whether the payment by the employee to his employer arose directly out of the employment or was a payment to abrogate the contract.
  • The National Insurance position will reflect the income tax decision.

The taxpayer Julian Martin’s negative employment income was the subject of a First-tier Tribunal hearing (TC2460) which I covered in an article “Working for nothing?”. He won the case and HMRC appealed to the Upper Tribunal.

The taxpayer was again represented by Philip Ridgway of...

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