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HS Patel (TC4189)
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...
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