The case of HMRC v Julian Martin introduced the concept of negative earnings. HMRC have now published their view following a UT decision.
The case of HMRC v Julian Martin introduced us to the concept of negative earnings in 2014. In summary, Mr Martin entered into an employment contract which committed him to his employer for a period of five years in return for a fixed bonus payment. PAYE and Class 1 National Insurance Contributions were deducted via the payroll. The gross payment was £250,000 and Mr Martin received £147,500. Subsequently, Mr Martin notified his employer that he wished to terminate the employment, triggering a pro-rata claw-back provision. The amount that he paid back to his employer was calculated to be £162,500. Consequently, Mr Martin sought to recover the income tax previously collected under PAYE in respect of that amount. Following this decision, HMRC have now published their view on the context in which negative earnings can arise, and how they should be identified.
For more information on the guidance, please see our detailed note.
For further information please contact :
KPMG has launched a state of the art digital platform that enhances your experience and provides improved access to our content and our people, whatever device you are on.