Employment income and income not taxed elsewhere - L8 Flashcards
Lecture 8 (25 cards)
What does s. 6 ITEPA 2003 charge?
Income tax on “employment income”, especially covering “earnings”.
How does s. 62 ITEPA 2003 define “earnings”?
Salaries, wages, fees, and some other benefits.
What is “employment” under s. 4 ITEPA 2003?
A “contract of service”.
Why does HMRC prefer workers to be classified as employees?
Because PAYE allows employers to collect tax, reducing admin.
What is a “contract for services”?
A self-employed arrangement, outside the employment rules.
What is the key test from Hall v Lorimer?
If the person is in business on their own account, they are self-employed.
What distinction is made in Davies v Braithwaite vs Fall v Hitchen?
Actress = professional (self-employed); Dancer with permanent post = employed.
Can short-term or part-time work still count as employment?
Yes, per Sidey v Phillips.
What did the 2024 case (Professional Game Match Officials Ltd) clarify?
Even refereeing one football match can be an employment.
What is an “office” under s. 5 ITEPA 2003?
A position that exists independently and may be held by successors.
Do office holders get taxed the same as employees?
Yes, the tax rules are the same.
Can a person be both an employee and an officeholder?
Yes, e.g. an executive director is both.
How did Edwards v Clinch (HL) redefine “office”?
An office need not be permanent or always have a successor, just some duration and the possibility of a successor.
What does s. 15 ITEPA 2003 state about ceased offices?
Income is still taxable even if received after office has ended.
How are termination payments taxed under ITEPA?
Part 6 Ch.3: First £30,000 is exempt; the rest is taxable.
When does termination money get taxed as self-employment income?
If the role was part of the self-employed business (e.g., a business asset).
What was the issue in Blackburn v Close Bros Ltd?
Termination payment taxed as business income, with no £30k exemption.
What did IRC v Brander & Cruickshank [1971] say about business assets?
A role must be deliberately acquired as part of the business, not incidentally.
What was Kerridge’s criticism of the “business asset” approach?
It wrongly mixes self-employment and employment rules, which should be exclusive.
What does s. 687 ITTOIA 2005 cover?
Income from any source not taxed elsewhere – a sweeping-up rule.
What case shows s. 687 applying to isolated services?
Ryall v Hoare – payment for acting as a guarantor.
Is a legal obligation needed for s. 687 to apply?
Yes. Brocklesby v Merricks – payment from gratitude = windfall, not income.
How do courts distinguish isolated services from sales?
Services (Hobbs v Hussey) = income; sales (Haig v IRC) = capital.
Can an isolated purchase and resale fall under s. 687?
No – Jones v Leeming: it must be trade or capital, not income under s. 687.
