The Latest from Cloisters

News, Publications, Policies, Events and Blogs

Settling a taxing point about taxation of settlement agreements

If you are an advisor who only occasionally dabbles with tax issues in settlements for fear of having to delve into murky tax law, take note of a recent decision providing a lucid summary of the relevant principles. The case is also a cautionary tale for claimants challenging tax assessments as the claimant’s unsuccessful challenge before the First-Tier Tax Tribunal (FTT) resulted in a tax bill larger than the one sent to him by HMRC. If Oti-Obhihara [2011] IRLR 386 and Orthet v Vince Cain [2005] ICR 374 ring a distant bell from advising on settlements past, they should now be retuned to the sound of alarm bells as the FTT in Moorthy v HMRC [2014] UKFTT 834 (TC) has doubted their correctness.

Continue reading