7. Employment Income - causation Flashcards
BASIC TEST
Hochstrasser v Mayes
1) payment to E for being/acting as E
2) for past, present, or future services
(only getting it because you’re an E is not enough - you must have got it for services)
- here he got it because of the housing scheme
- it wasn’t because E was acting as good E
- all employees had option of joining the scheme
Mairs v Haughey
Payment to E to give up contingent right under redundancy scheme
- NO CAUSATION
- HL reaffirmed payements to compensate for loss/relief/distress is NOT taxable
- not for services, it was only payable upon certain circumstances and only after termination
Hamlet v Godfrey
GCHQ case
- CAUSATION
- it was a payment in recognition of loss of rights BUT the right removed was RELATED TO EMPLOYMENT
- if payment is for loss of right directly connected with employment (not personal rights) = CAUSATION
this extends Hochstrasser by saying payment can be for CONTINUING to act as E as well as being or acting as E
Moore v Griffith
bonus given to English World Cup Football Team
- NO CAUSATION
- true purpose; mark participation in an exceptional event (money had the “quality of a testimonial or accolade rather than quality of remuneration for services”)
1) foreseeable element of reoccurrence?
2) expectation of reward?
3) announced after services already completed?
4) nature of donor? (here FA promotes football, it doesn’t benefit from service of footballers so it is more consistent in character that the payment is to applause victory)
5) what donor said when payment is made (least strong argument)
6) all team received the same sum
Holland v Geoghan
refuse collector lost one of his rights - he went on strike - employer paid him money
- EMPLOYMENT INCOME = CAUSATION
- it was a form of substituted remuneration for former rights
- it was an inducement to go back to work
Ainslie v Buckley
T worked from home and argued part of his salary was for of home office
- rejected argument
- clearly all earnings = CAUSATION
- it is from employment - straightforward hochstrasser situation
- salary = monthly payments, no reimbursement for telephone
- R treated the whole salary as arising from employment
Ladier v Perry
£10 vouchers given to E at Christmas to ‘foster good relations’
- CAUSATION = taxable
- done every year, this is more like any other bonus (bonuses are taxable and part of normal salary)
- everyone got it regardless of performance
Shilton v Wilmshurts
80k (Southhampton) = taxable (Shilton didn’t challenge this)
- payment by R to E at commencement of service
- taxable benefit for future services
- not compensation for loss so not not taxable
75k (NFFC) = taxable (shilton argued it was a termination of employment payment and not taxable)
- its taxable
- S.62 IS NOT LIMITED TO “FROM EMPLOYER” IT CAN BE “FROM EMPLOYMENT”, money can be given by 3P
- 3P can make payments that count as ‘from employment’ even if 3P has no interest in E’s future performance under employment contract
- 75k is paid in return for agreement to be employee of Southhampton so it is ‘from employment’
Blakiston v Cooper
easter offerings - vicar taxed on it
- taxable
- money given by reason of his office
- if money given for a particular purpose (e.g. holiday due to vicar’s personal qualities) then it can be a gift and not taxable
Calvert v Wainright
taxi driver taxed on the £75 of tips he received in a year
- CAUSATION
- although tips are not compulsory, it is an ordinary way of remuneration for services rendered
- not a mere gift
- but if one customer made a big tip (£10, now about £300) at Christmas, that might be not taxable as it might be acknowledging driver’s qualities rather than service
Seymour v Reed
cricket player got benefit match
- NO CAUSATION
- it is a GIFT
- no right legally
- purpose wasn’t reward for services but GRATITUDE
- not for acting as E
- it is exceptional
Moorhouse v Dooland
collection taken from spectators if cricketers played to a CERTAIN STANDARD
= TAXABLE (there is causation)
- not like Seymour: here, there is a contractual right, only a benefit if he performed well, and a small amount compared to his salary
Jenkins LJ 4 principles: 1) by virtue of office/employment, remuneration for services 2) COE entitled? 3) periodic/recurrent? if 1-3 = yes, then likely taxable
4) present on grounds personal to recipient
if 4 = yes, likely not taxable
Pritchard v Arundale
senior partner at firm of chartered accountants offered 4,000 shares to serve as MD of another company
= NO CAUSATION, NOT TAXED
- didn’t come from employment
- it was compensation for T giving up established position
- not for future services (if she died before performance, shares would transfer to her estate)
- given by 3P (principal shareholder)
- NATURE of transfer
- MONEY not conditional on joining
Glantre v Goodhand
10k inducement to join new employer
TAXABLE
- NO loss, no compensation for anything
- this E failed to show he provided consideration (like Pritchard did, P gave up role as accountant)
- just moving from one employment to another
Jarrold v Boustead
T signed as professional rugby player (so he’d be barred from competing as an amateur)
- NOT TAXABLE
- compensation was for loss
- he’s giving up amateur status for life
