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Payments by former chairman and shareholder to company’s employees were taxable benefits

By Mark McLaughlin, February 2024

Payments made by the former majority shareholder and chairman of a company to its UK workforce were taxable under the benefits code and chargeable to income tax and National Insurance contributions. 

The appellant (OOCL) was a family-owned international container shipping company. The majority shareholder (CCT) was a ‘hands-on’ chairman, who valued the workforce. In July 2017, OOCL received a significant takeover offer for the business, and on 24 July 2018 CCT’s interest in the company was sold. He resigned as a director of OOCL. On 2 August 2018, CCT sent an email to all employees, announcing that a special discretionary payment would be made by his family to the employees and distributed by the company as a bonus.  

UK employees were notified by the administration department of the gross sums which were to be paid to them. The payments were made on 27 September 2018. The employees’ payslips showed the gross sum

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