Goldberg v HM Revenue and Customs
| Jurisdiction | UK Non-devolved |
| Judgment Date | 23 July 2010 |
| Neutral Citation | [2010] UKFTT 346 (TC) |
| Date | 23 July 2010 |
| Court | First Tier Tribunal (Tax Chamber) |
[2010] UKFTT 346 (TC)
David Steele Porter (Judge) (Chairman), John Nisbet (Member)
The Appellant in person
Mrs Najine Newham instructed by the General Counsel and Solicitor to HM Revenue and Customs for the Respondents
Direct tax - whether payment of 76,872 paid by company in lieu of notice was a contractual payment - if so, the 30,000 tax free threshold did not apply - payment contractual - appeal dismissed
1. The Appellant, Paul Goldberg (Mr Goldberg), appeals against an amendment raised under Taxes Management Act 1970 section 28A section 28Bsections 28A and 28BTaxes Management Act 1970 for the tax year ended 5 April 2005, amending Mr Goldberg's Self-Assessment from 18,825.90 tax due for repayment to 6,826.00 due for repayment. Mt Goldberg says that the payment was not made under his contract of employment but under a breach of contract by Intouch Group PLC (his employers) for failing to give him an appropriate notice of termination. The Respondents (HMRC) say that there was a contract of employment and the payment was made to him in lieu of notice under the terms of his contract.
2. Mrs Najine Newham (Mrs Newham) appeared for HMRC and produced a bundle of documents to the Tribunal. Mr Goldberg appeared in person. We were referred to the following cases:
EMI Group Electronics Ltd v Coldicott (HMIT)TAX[1997] BTC 532
SCA Packaging Ltd v R & C CommrsUNK [2007] EWHC 270 (Ch); [2007] BTC 308
3. Mr Goldberg told us that he and his colleague, Andrew Garnham (Mr Garnham), had been in negotiation with Intouch Group PLC (Intouch) for some 18 months in relation to the development of a software business referred to as GAP. They had been seeking an investment of 750,000 from Intouch, but the chairman, Mr Watkins, had decided not to proceed with the venture. The market for computer products and activities had expanded rapidly during the negotiations, but unfortunately the market had collapsed before the proposals could be finalised. As a result, Intouch purchased a software company and as a result had asked Mr Goldberg and Mr Garnham to join the company to expand that business. Mr Goldberg told us that he had met with Mr Watkins at his local public house "The Black Bull" where the terms of the agreement were discussed. At that meeting, he had not agreed to join the company because he wanted a provision for either a BMW or a superiot motor car, and a 12 months rolling contract with a 12 months notice period if he were to be dismissed. Mr Goldberg produced copies of the emails between himself and Mr Garnham dated 2 February 2002 in which Mr Garnham had stated:
I understand your concern over the twelve month contract and the car but Bob (Mr Watkins) has a point in that no other current employee has such termination rights/car policy so this would lead to a dangerous precedent if such terms were to be offered to any new people particularly when the base salary on offer is already in excess of existing senior staff
Mr Goldberg alleged that he therefore entered into a contract with Intouch, which did not include a provision for 12 months notice if they wished to terminate the agreement. He produced a letter addressed to Mr Garnham, from Mr Garnham's solicitors, McCormicks, dated 10 August 2004, relating to Mr Garnham's contract in which the solicitors advised:
Contractual position. The contract of employment states the following:
On commencement of your employment, you will be entitled to 12 months notice apart from in the case of gross misconduct and you will be required to give one month's notice to the company.
There is no payment in lieu of notice clause in your contract of employment. I have seen a copy of an email from Graeme King dated 19 July 2004 to Paul and yourself. It states "we will now be proceeding on the basis that you will not continue to be employees of InTouch Group and we expect this will take effect as of 1 August 2004". I would interpret this as being confirmation of termination of employment with the company. No notice has been given therefore the company has terminated your employment in breach of contract. Any compensation payment to be made will therefore be genuine compensation for loss of office and will attract tax exemption in respect of the first 30,000 of any such payment.
Mr Goldbergh did not produce Mr...
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