What type of receipt?

13 April 2010

Issue: 4250 / Categories: Forum & Feedback

A company has received a substantial payment under a keyman insurance policy. Under an agreement with one of its directors, half of that amount was paid to the director’s family

Our client a company with three directors has recently claimed £100 000 on a keyman insurance policy which contained a critical illness clause. Tax relief was claimed by the company on the monthly contributions.

In the company’s records there is a letter of intent to pay one of the director’s surviving family (i.e. the family of the person covered) 50% of this amount. The company had an agreement drawn up at the time which said that in the event of that director’s incapacitation or death the company would pay £50 000 to the director’s family.

There was no reference in the actual agreement that this would be 50% of the keyman insurance policy. The company maintains that it is not paying out an element of the insurance receipt but is paying an amount that has been agreed based on the director’s incapacitation.

We believe that the company...

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