Summary
A payment by an employer for employees’ client connections was employment income liable to income tax and National Insurance contributions, as opposed to a capital receipt.
Background
The respondent company (SWCS) was part of a group. Following acceptance of an offer of employment in August 2005, under a separate contract in November 2006 an individual (PS) and other members of a team who worked with him agreed to deliver to another company in the same group (SWIM) his client relationships in respect of a previous employer (which had been built up since 1996) for what was described as a ‘goodwill payment’.
The central issue was whether the payment to PS and the team constituted earnings from their employment. HM Revenue and Customs (HMRC) issued to SWCS determinations under the PAYE regulations (SI 2003/2682, reg 80) and notices
