Transfer is equivalent to earnings

The taxpayer company set up a retirement benefit scheme by way of a trust for its director into which it transferred gilts.

HMRC decided the taxpayer was liable to pay Class 1 National Insurance on the value of the sum transferred.

Whether it was liable depended on whether the payments had been ‘earnings… paid to or for the benefit of an earner’ within the meaning of Social Security Contributions and Benefits Act 1992 s 6(1).

The Upper Tribunal allowed the taxpayer’s appeal ruling that the payments were not ‘earnings’; the Revenue appealed.

The issue before the Court of Appeal was whether the employer’s payment in the form of the transfer of gilts for the benefit of an employee to trustees of a funded unapproved retirement benefits scheme was earnings as defined in s 3(1)(a): ‘Any remuneration or profit derived...