Policy News Journal - 2014-15

Income tax relief for gifts of shares to charity

14 May 2014

A tribunal appeal case has been published regarding the relief claimed on a high number of Gifted Shares.

The case is an appeal by Mr Nicholas Green against a Closure 5 Notice dated 27 June 2011 under section 28A Taxes Management Act 1970 amending his self assessment return for the year 2007/08. The amendment disallowed in part his claim for relief in respect of two gifts of 118,750 shares of 0.1p each in Chartersea Limited to each of the National Eczema Society and the Alzheimer’s Society on 4 April 2008. Mr Green had claimed relief under section 431 of the Income Tax Act 2007 of £237,500 based on a market value of £1.00 per Gifted Share. The Respondents’ officer did not accept that this amount reflected the market value of the Gifted Shares at that date. She considered that their market value was only 30p per Gifted Share. She restricted Mr Green’s claim for relief to £71,250 (a disallowance of £166,250) and amended his return on that basis.

The full details of the case can be accessed through the CIPP news link below.

Income Tax Tribunal - N Green v HMRC - April 2014

Read HMRC’s press release

Employment status of director on insolvency of company

19 May 2014

Can the owner of a company be regarded as an employee for purposes of a claim for a redundancy payment?

Yes, depending on the nature of the relationship between the individual and the company, held the Employment Appeal Tribunal in Secretary of State for BIS v Knight .

With thanks to Daniel Barnett’s employment law bulletin which summarises the case:

The Claimant had been the sole shareholder and Managing Director of a company from the date of its incorporation in 1991 until the day it ceased trading in 2011. In the last 2 years of the company's trading, the Claimant forfeited her salary so as to enable other employees and creditors to be paid and, subsequent to the company's insolvency, applied for a redundancy payment from the Insolvency Service. The Tribunal received evidence to demonstrate that the Claimant had been engaged by her company by means of an unexecuted contract of employment, which set out a job description, stipulated working hours, stated a salary, provided for eligibility for bonuses and made provision for termination of the Claimant's contract of employment. The Claimant was also able to provide P60s which showed that she had been paid by the company (albeit in varying amounts, which fell below her contractual entitlement) as an employee. In dismissing the Secretary of State's appeal against the judgment in the Claimant's favour, the EAT reiterated the point that whether or not an individual is an employee of a company is a question of fact. As such, it was not perverse of the Tribunal to find that: (i) the Claimant was an employee of the company; (ii) there was no lack of mutuality or of consideration, and;

CIPP Policy News Journal

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