Pinsent Mason reports: Although transferring the shares was not the same as a "payment of money", they fell within the RCA definition because they could easily be sold or converted to cash, the Upper Tax Tribunal said in its decision. HM Revenue and Customs (HMRC) can collect income tax through PAYE and National Insurance contributions (NICs) from certain non-cash 'payments' made to employees if they constitute RCAs. This prevents employers from avoiding their liabilities under PAYE by providing benefits to employees as shares, other financial instruments or commodities. Taxable benefits provided to employees that cannot be easily converted to cash will still be subject to income tax, but this will be due under the self-assessment regime. Investment management group Aberdeen Asset Management (AAM) had conceded that income tax was due on the shares following a 2010 tribunal hearing, but had argued that it was the employees' responsibility to account for any income tax due under self-assessment. HMRC argued that the PAYE regime would apply, making it the employer's responsibility to account for tax, either because the shares were the equivalent of a 'payment' or because they were RCAs. The company had used an offshore employee benefit trust to set up offshore companies each with one share in the name of a senior employee as a means of channelling additional remuneration to each employee. Employees were then able to receive benefits from their companies, mainly in the form of loans which were not repaid. AAM successfully argued that the delivery of the shares in the company was not a "payment" for PAYE purposes. Mr Justice Warren agreed that, as employees did not have the "unconditional right" to immediate use of the cash in the company, the transaction could not be considered as equivalent. However the 'cash box' structure of each company, with only one shareholder and no liabilities, meant that the employee-shareholder would be able to extract a value from the company which was the same as the expense incurred by AAM in providing the shares. This meant that they fell within the RCA regime, leaving AAM to account for income tax under PAYE as well as class 1 NICs. Read the full report from Pinsent Mason
POST EMPLOYMENT VICTIMISATION
22 February 2012 An employment tribunal has held that post-employment victimisation is not unlawful under
the Equality Act 2010. Pinsent Mason reports:
The employee in this case (Jessemey v Rowstock Ltd and another) was dismissed and brought claims for age discrimination and unfair dismissal. Following the claims being issued his former employer provided an unfavourable reference to an employment agency and the employee raised a claim for victimisation. The Tribunal agreed that the reference had been provided as a result of the employee raising tribunal proceedings. This constituted an act of victimisation under the Equality Act 2010 (the Act). However, under section 108(7) of the Act, victimisation was not covered by the Act's post employment provisions. Therefore, the claim could not succeed.
CIPP Policy News Journal
09/10/2012, Page 65 of 234
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