Murphy: earnings and settlement agreements

"In Murphy, the Court of Appeal overturned a decision from the Upper Tribunal which held that ‘profit’ in ITEPA 2003 s 62(2)(b) means net profit rather than gross profit. Whether a payment to an employee is taxable employment income therefore requires a twostage analysis: first, is the payment from the employment, and second, is it an allowable deduction under ITEPA 2003 Part 5. The decision reminds practitioners of the need for clarity as to how payments under settlement agreements are expressly characterised within the agreement itself."

This article was originally published in Tax Journal. 

Joshua Carey is a specialist in indirect and direct tax litigation both for taxpayers and HMRC. He gives pragmatic advice and is highly regarded for his advocacy skills. Joshua has a heavy litigation practice in the First-tier Tribunal, Upper Tribunal and High Court as both an unled advocate, as well as a leading advocate.

Sam Way is a multi-specialist practitioner with particular expertise in both employment and tax matters. With experience across the range of statutory and non-statutory employment proceedings, and in litigation for both HMRC and taxpayers, Sam is well-placed to advise on employment-related tax matters.

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