CheckLists.Tax (beta)
F1. Employee income/
remuneration
PRELIMINARY
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Remuneration distinguished from other income
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- Image exploitation: genuine payment for right to use image/require promotion not additional remuneration
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- In Sports Club Plc, HMRC argued that an agreement with a company to pay players for the right to exploit their image was a means of paying them additional remuneration for their employment as players.
- Argument rejected: "[88]...If it is accepted that the promotional agreements were real, and that the parties intended activities to be performed under them in return for payments, and that the parties could have sued on the agreements, then no authority was cited to us to support the view that those realities could be ignored for income tax purposes."
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Legislation:
Cases:
Sports Club Plc v. Inspector of Taxes [2000] STC (SCD) 443;
HMRC manuals:
Commentary:
See also:
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INHERITANCE TAX
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INHERITANCE TAX
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Gift with reservation
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- Whether remuneration arrangements following gift of shares give rise to a reservation of benefit
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-Continuation of existing reasonable commercial arrangements in the form of remuneration and other benefits for the donor's service in a business does not amount to a reservation, provided the benefits are not affected by the gift (IHTM14337).
- If new remunerative arrangements are made, HMRC will investigate whether it amounts to a reservation of a benefit.
- HMRC will normally disregard rights that can only be exercised in a fiduciary capacity (IHTM14395).
- This might be relied on where donor gifts shares to trust and exercises voting rights as trustee.
- No reservation if voting rights carved out by pre-gift re-organisation.
- But query whether the reorganisation + gift will fall within IHTA 1984, s.98(3) - deemed transfer of value that is not a PET (see McCutcheon 7-140).
Legislation: IHTA 1984, s.98(3);
Cases:
HMRC manuals: IHTM14337; IHTM14395;
Commentary: McCutcheon 7-134;
See also:
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