Partner, not employee

The taxpayer ran a sub-post office within his retail business. The Post Office paid him £76 008 as compensation when the branch closed in June 2004.

HMRC assessed the payment to tax on the basis £30 000 was exempt under ITEPA 2003 s 403 but the balance was taxable.

The taxpayer appealed claiming his wife had been his employee when he was sub-postmaster. He claimed he should be allowed a deduction in respect of £37 122 he paid her as redundancy. He also claimed the costs of refitting the shop to remove the trappings of the sub-post office.

The First-tier Tribunal found there was no evidence to show the wife had been an employee. She had been a partner in the retail business entitled to 50% of the profits. No deduction could be allowed on the payment to the wife.

Expenses incurred by the taxpayer in...