Reply to: PAYE & Damages - Tax Free Payment

[SimonMac]

PodgyCo had a contract with PodgyContractor - which was breached! Actually I'm gonna call the employer helpline!

So are you now admitting that "the consultant" is in fact you?!

If that's the case you cannot award yourself a settlement, as in effect you will be in breach of contract with yourself as you will not be an employee of PodgyCo you will be a director, end off, case closed, other definitive metaphor

[LisaContractorUmbrella]

PodgyCo had a contract with PodgyContractor - which was breached! Actually I'm gonna call the employer helpline!

Excellent idea Podgy - following that conversation you are very likely to experience personal service from a tax inspector - don't forget all the soap advice

[Clare@InTouch]

In a freak incident at a little known accountants in a disused pottery in Stoke on Trent a number of insects were suddenly found to drop dead in some sort of mass suicide attempt. Experts are very confused but do recall the accountant saying "oh no not you again" shortly before he jumped in front of the 11:36 to Rugely.

Maybe we should stop encouraging him to get an accountant, otherwise we'll be partly responsible!

[LisaContractorUmbrella]

Thank you. You may now call me Monica.

Saint Monica - it definitely has a ring to it

[ASB]

Oh to be a fly on the wall during that conversation

In a freak incident at a little known accountants in a disused pottery in Stoke on Trent a number of insects were suddenly found to drop dead in some sort of mass suicide attempt. Experts are very confused but do recall the accountant saying "oh no not you again" shortly before he jumped in front of the 11:36 to Rugely.

[ASB]

PodgyCo had a contract with PodgyContractor - which was breached! Actually I'm gonna call the employer helpline!

You are getting there, slowly. Was this a contract of employment? Not according to you.

So, you can make payment under the terms of that contract for the breach.

You have never at any point given any details of how you paid PodgyContractor. Either you paid him through PAYE (though you say he wasn't on the payroll), or he invoiced you.

The above is largely irrelevant. What I, and others, have beenbanging on about is really simple. Any payment you make to PodgyContractor has to be under terms of the contract with him. That contract will govern what the payment is.

This is a totally seperate event to the fact you have received into PodgyCo for the breach. It could well be the case that it ends up being the same amount, in this case PodgyCo has a receipt for X and an expense for X. Net effect 0. But watch the vat implications....

[Clare@InTouch]

PodgyCo had a contract with PodgyContractor - which was breached! Actually I'm gonna call the employer helpline!

Oh to be a fly on the wall during that conversation

[Podgy]

I will try this one more time. Though it is rather like pushing water uphill.

The link you have refereed is describing a situation where an employee is compensated for some breach of thier contract with an employer.

You are simply not in that position.

PodgyCo's client breached the client with PodgyCo. This is a commercial dispute which has now been settled. As I stated earlier this would normally be seen as earnings from trade to PodgyCo.

Now, the further question is what, if any were further consequences of that breach.

Did PodgyCo fire PodgyCoEmployee ? This seems unlikely since it appears they were not your employee. If you did fire them, outside the terms of their contract of employement then you could pontentially make good to the ex employee under ther terms of their contract of employment. Were you to do this then this would (generally) be an expense. Thus the overall impact on PodgyCo would be zero.

If they were not your employee then their is nothing to stop you making an ex gratia payment. This would be an expense (generally).

You seem to insist on trying to combine these 2 potential events.

PodgyCo had a contract with PodgyContractor - which was breached! Actually I'm gonna call the employer helpline!

[SimonMac]

Podgy, have you been to an accountant yet? If yes they probably told you the same advice you got here which is why you are still trying to convince us (it sounds like you have already managed to convince yourself) that what you want to do is acceptable, if you haven't been to an account you are simply a troll so please just **** off

[ASB]

ASB you honestly have the patience of a Saint

Thank you. You may now call me Monica.

[northernladuk]

Still undecided about this one!

Reckon it counts as compensation?

Termination payments and benefits: example: damages for breach of contract

It was a cheque from the solicitors just stating 'As settlement' so cant put through as earnings (no contract/client etc).

It does... You are right... Go ahead

[LisaContractorUmbrella]

ASB you honestly have the patience of a Saint

[ASB]

Still undecided about this one!

Reckon it counts as compensation?

Termination payments and benefits: example: damages for breach of contract

It was a cheque from the solicitors just stating 'As settlement' so cant put through as earnings (no contract/client etc).

I will try this one more time. Though it is rather like pushing water uphill.

The link you have refereed is describing a situation where an employee is compensated for some breach of thier contract with an employer.

You are simply not in that position.

PodgyCo's client breached the client with PodgyCo. This is a commercial dispute which has now been settled. As I stated earlier this would normally be seen as earnings from trade to PodgyCo.

Now, the further question is what, if any were further consequences of that breach.

Did PodgyCo fire PodgyCoEmployee ? This seems unlikely since it appears they were not your employee. If you did fire them, outside the terms of their contract of employement then you could pontentially make good to the ex employee under ther terms of their contract of employment. Were you to do this then this would (generally) be an expense. Thus the overall impact on PodgyCo would be zero.

If they were not your employee then their is nothing to stop you making an ex gratia payment. This would be an expense (generally).

You seem to insist on trying to combine these 2 potential events.

[Podgy]

Still undecided about this one!

Reckon it counts as compensation?

Termination payments and benefits: example: damages for breach of contract

It was a cheque from the solicitors just stating 'As settlement' so cant put through as earnings (no contract/client etc).

[ASB]

he's in prison

"You must spread some Reputation around before giving it to LisaContractorUmbrella again."

Where do I send the bill for a keyboard? This one seems to be covered in coffee.