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HMRC internal manual

Employment Income Manual

Employment income: earnings from employment: payments on taking up employment: ascertaining the facts

Section 62 ITEPA 2003

In order to decide whether a payment on taking up employment is within EIM00700 or EIM00710, it is necessary to obtain full details of the negotiations that took place. They may not all be recorded in the correspondence and documents and you will need to interview the parties. In particular you will need to know:

  • when was the prospective employee approached
  • was it clear from the start he was being offered a job
  • what remuneration package was he offered and how was it amended if at all during the negotiations
  • when and by whom was the question of a lump sum payment first raised
  • how was its amount decided on.

It is obvious that an employer will not pay an employee merely to end his employment with a previous employer. Nor is an employer likely to make a payment in these circumstances that will not be recoverable if the employee never enters the employer’s service. In the Glantre Engineering case (see EIM00700) the judge said that if that had occurred in that case:

“I do not doubt that any Court before which subsequent litigation between him and the company came would have held him to be in breach of the agreement.”