Colquhoun v Revenue & Customs 2010 UKFTT 34

Mr Colquhoun received a £30,000+ payment from his employers Babcock Group to buy out his accrued contractual redundancy rights in 1997. The question was whether that had to be taken into account when determining the extent to which the £30,000 exemption was available in respect of a subsequent redundancy payment paid to him in 2005 when he was made redundant. The question for the Tribunal concerned only the nature of the 1997 payment. The tribunal held that it was not a termination payment and therefore did not have to be taken into account when applying the £30,000 exemption in respect of the 2005 payment. The Tribunal did not address how it should have been treated in 1997 and the assessment for 1997 was closed.

Key point: The case has raised uncertainty about the treatment of buy out payments where there is no termination of employment.