SCA Packaging Ltd V HMRC

Ch D [2007] STC 1640; [2007] EWHC 270 (Ch)

A company made several employees redundant and paid them payments in lieu of notice. Their employment contracts for specified payments in lieu of notice. HMRC issued a PAYE determination under the Income Tax (Employments) Regulations 1993, Reg. 49. The company contended that the payments were not taxable.

It was held that the payments were taxable and should have been subject to PAYE as these were payments made in accordance with the contracts of employment… ’An event contemplated and provided for in the contracts occurred triggering the clause in their contracts entitling them to payment and the payment must constitute emoluments from the employee.’

Compensation for loss of office; contractual; whether taxable and whether PAYE should have been operated.