Employment Changes to Taxation of Termination Payments

On August 10th 2016[1] the government published its response to the consultation on termination payments held in July 2015. The government has clarified its proposals for reform and has set out draft legislation in respect of which further consultation will take place until 5 October 2016.
The consultations are being held with a view to simplify taxation payments on termination of employment; these have become so complex that they have invited criticism and generated uncertainty. It was announced that the changes would come into effect from April 2018. The consultation confirms that:

•     The distinction between contractual and non-contractual Payments in Lieu of Notice (PILON’s)  will be removed. As of April 2018 all PILON’s will be treated as being earnings which are subject to income tax and employer/employee national insurance contributions.
•     The current threshold of up to £30,000 will remain and the exemption from income tax and employer/employee NIC’s up to threshold figures will be maintained. The government will bring alignment to the rules surrounding income tax and NICs so that employers’ NICs will only be payable on termination payments above the £30,000 threshold.
•     With the exception of injuries amounting to psychiatric medical conditions, tax exemptions for payments for injuries will not include injury to feelings.

It is the government’s aim to have all payments, including PILONs that an employee has received or would have received during the notice period to be treated as general earnings and to be taxable as such.
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Nath Solicitors Limited
4/4a Bloomsbury Square,
London, WC1A 2RP
Tel: 02036705540
Email: shubha@nathsolicitors.co.uk
Web: http://www.nathsolicitors.co.uk/

Defendant still required to file acknowledgement of service despite Claimant’s failure to adequately serve

Rushworth v Harvey [2016] EWHC 1386 (QB)
Background
A dispute had arisen between the parties, where Rushworth alleged that remuneration was due, including reimbursements for flights paid for by Rushworth for work done for Harvey.
Rushworth had served the claim form on Harvey but failed to provide the particulars of claim and response pack. Given Rushworth’s failure to adequately serve, Harvey decided not to acknowledge service.
Rushworth subsequently sent the claim form again, along with the particulars of claim and a form for Harvey to acknowledge service.  However, given that this had now been some months later, Harvey sought to argue that the service was invalid as more than four months had now passed since the claim was issued.
In light of the above, Rushworth sought to obtain a judgement in default and Harvey applied to have the judgement in default set aside
It was therefore up to the High Court to decide as to whether judgement in default should be given or whether it should be aside.
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Contact Details..
Nath Solicitors Limited
4/4a Bloomsbury Square,
London, WC1A 2RP
Tel: 02036705540
Email: shubha@nathsolicitors.co.uk
Web: http://www.nathsolicitors.co.uk/

Tenants Beware! Exercising break clauses and providing vacant possession

Riverside Park Ltd v NHS Property Services Ltd (2016)
The High Court was asked to consider whether a tenant had exercised its break clause effectively and given vacant possession of the premises.
Background
On 24th September 2008, Riverside Park Limited (Landlord) had granted a ten-year lease (Lease) of its first floor premises to Wirral Primary Care Trust (Wirral).
The Lease contained a break clause, giving the tenant the right to terminate the lease on the condition that no less than 6 months’ notice was given to the Landlord and that vacant possession was given on or before the break date, being 24th September 2013.
Both parties had also entered into a license for alterations (License) enabling Wirral to carry out works such as installing partitions, kitchen units and an alarm, provided that Wirral complied with certain conditions; these were that they obtained the consent from insurers of the premises and that works were carried out in accordance with certain plans and specifications.
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Contact Details..
Nath Solicitors Limited
4/4a Bloomsbury Square,
London, WC1A 2RP
Tel: 02036705540
Email: shubha@nathsolicitors.co.uk
Web: http://www.nathsolicitors.co.uk/

High Court decides that proceedings are to be stayed whilst the FOS investigates.

Templars Estates Ltd and others v National Westminster Bank Plc and Royal Bank of Scotland, 2016
The High Court was asked to decide whether proceedings should be stayed whilst the Financial Ombudsman Service (FOS) investigated Templar’s complaints.
Background
Allegations were raised by Templar that Natwest had been negligent in the advice they had given. The dispute had in fact been an on-going matter for a considerable period of time to the point that stand-still agreements had been entered into in order to give parties breathing space to investigate claims, resolve matters and avoid litigation.
Despite the matter dragging on for a number of years, a resolution was not reached and a standstill agreement was subsequently not extended. Therefore, in order to avoid the matter being statute-barred and to protect their position, Templar issued proceedings.
Templar thought it best that the matter be referred to the FOS for their decision as it would be more cost-effective than taking the matter to the High Court; they asked that Natwest to agree to a stay in the court proceedings, whilst the FOS investigated.
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Contact Details..
Nath Solicitors Limited
4/4a Bloomsbury Square,
London, WC1A 2RP
Tel: 02036705540
Email: shubha@nathsolicitors.co.uk
Web: http://www.nathsolicitors.co.uk/