Part of an HMRC amendment to the taxpayer’s tax return relating to elements of a claim for unfair dismissal against their former employer was overstated, and the taxpayer’s appeal was allowed in part. 

The appellant was employed on terms which paid them a base salary of [£A] plus a discretionary year end cash bonus and discretionary deferred compensation under a long-term incentive plan (LTIP). The appellant’s discretionary cash bonus [$B] was guaranteed for the first year of employment, but any future bonuses would be determined by reference to a non-exhaustive list of factors. The terms of the LTIP provided the basis on which equity vested. The involuntary termination of employment resulted in the immediate cancellation of any unvested equity-based awards unless the employer applied ‘involuntary termination not involving any cancellation event’ at its discretion. 

On 31 December 2011, the appellant was