Termination payment

Requirement to notify

The taxpayer was made redundant and received a large termination payment on 9 April 2008. The employer deducted basic rate tax from the part that exceeded £30 000. HMRC did not send the taxpayer a tax return for 2008-09 and the taxpayer did not notify the department about the payment.

In December 2013 HMRC issued a discovery assessment for 2008-09. The officer later discharged that assessment and raised a new one for the same amount for 2007-08 after the taxpayer’s adviser said the payment had been made in that year. The taxpayer appealed saying the assessment had been made out of time.

The First-tier Tribunal found from the evidence that the effect of the termination agreement was that the taxpayer’s right to enforce the payment arose after 5 April 2008. Therefore it was taxable for the purposes of ITEPA 2003 s 686 in...