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HMRC internal manual

Employment Income Manual

Employment income: basis of assessment for general earnings: the time when earnings are received: entitlement to payment of earnings: “White v Inland Revenue Commissioners” SpC357

Rule 2, Sections 18(1) and 686(1) ITEPA 2003


The case of White v Inland Revenue Commissioners (SpC357) illustrates the importance of:

  • Establishing all of the relevant facts and
  • Deciding when entitlement to receive earnings arose

White v Inland Revenue Commissioners

Jonathan White joined the Royal Ulster Constabulary on 4 September 1994. Prior to joining the Northern Ireland Police Authority had provided him with promotional material and a summary of his conditions of service. Both documents referred to the availability of a “housing allowance” that was paid when accommodation could not be provided. On 1 September 1994 the housing allowance was abolished. Police officers in post before that date were paid a “Replacement Allowance” at the same rate as the housing allowance.

Mr White discovered that was not entitled to either housing or replacement allowance. A number of police officers were similarly disadvantaged. The Police Federation, who represented the officers, selected a test case. Before the case could be heard by the courts a negotiated settlement was reached. The Police Authority agreed to make ex-gratia payments of housing allowance (replacement allowance) from 1 September 1994 as if the Constables had first been employed on 31 August 1994.

In August/September 1997 Mr White received payment. This sum included awards attributable to 1995-96 and 1996-97. He claimed that the sums attributable to the earlier years should be assessed in those years and not included in his self-assessment for 1997-98.

It was accepted that the housing or replacement allowance were earnings from the employment. The dispute was only about the timing of the charge to income tax. Whether, under Rule 2 of Section 18 ITEPA 2003 entitlement arose in 1995-96 and 1996-97 or in 1997- 98.

The Special Commissioner decided that Constable White was not entitled to receive payments of allowances in 1995-96 and 1996-97. Even though the aggregated award was calculated in terms of amounts due for those years he was not entitled to receive payment until 1997 when the Police Authority decided to accept the Federation’s claim.

The Special Commissioner commented on Section 202B(1)(b) ICTA 1988 (Rule 2 Section 18 ITEPA 2003). In his view the assessability of earnings for any particular year of assessment must be capable of being judged at the time, not later than immediately after the year in question. In this case the appellant could not demonstrate his entitlement to payment for earlier years on the 6 April following each year. As noted above, entitlement did not arise until the Police Authority agreed to make the awards.

Compare and contrast

This decision in this case is based on the same view of the law taken in respect of police officers who have to resign for disciplinary reasons but are later re-instated following a successful appeal. See EIM68180. In contrast, compare the time when entitlement to arrears of pay arises when claims are made under Equal Pay legislation. See EIM42290 and EIM02530.