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Do not forget the taxman!
Key points
- There are no special UK tax rules for mediation settlements and the usual tax rules apply.
- The mediator is not there to provide advice or impose a solution.
- ‘What is the payment’ and ‘what is the payment for’ are vital questions to the tax analysis.
- It is a good idea to have a tax adviser with settlement and mediation experience.
To quote Shakespeare in The Merry Wives of Windsor: ‘If money go before all ways lie open’. In the sometimes febrile atmosphere of a mediation this can be reflected in the ‘how much can I get from’ or ‘how little do I have to pay the other person’ approach that is sometimes used by the parties involved in a mediation.
Unsubtle and simplistic
However this can be an unsubtle and sometimes simplistic approach to things if tax is ignored as is sometimes the case....
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