20 |
14A.4.4.3 Reality and the Sunday Organist |
It is significant that in Jarrold v Boustead the disqualification of the player from rugby union or amateur athletics was for life. On parity of reasoning if C, a church organist, were required to give up Sunday golf as one of the conditions of employment and was paid £500 compensation, that sum would not be taxable under section 62.98 If, however, the condition was against playing golf at those times when C ought to be playing the organ, the payment would only be a thinly disguised remuneration. More difficult is the question whether such a sum would be taxable if the disqualification against Sunday golf or against playing rugby union were binding only so long as C was church organist or played rugby league. It may be significant that in Pritchard v Arundale, where there was nothing to prevent the taxpayer from resuming his practice as a chartered accountant on leaving his employment, Megarry J stressed the difficulties which a person of the taxpayer’s age would find in building up his practice again.99 |
14A.4.4.4 Payment as Part of Employer–Employee Relationship |
A payment for loss of a right which is part of the employer–employee relationship is taxable following Hamblett v Godfrey.100 A payment in return for the surrender of a right which is part of the employer–employee relationship, as opposed to mere social advantages, falls within section 62 (ex 19). Therefore compensation for loss of the right to join a trade union was held taxable in Hamblett v Godfrey. In Shilton v Wilmshurst101 Lord Templeman said that the rights lost in Hamblett v Godfrey were not personal rights but were directly connected with the employment; it followed that the source of the payment was the employment. Shilton v Wilmshurst102 leaves intact the tax-free status of the payment in Pritchard v Arundale. Jarrold v Boustead was not cited but presumably remains in place for the same reason. The test of direct connection was used by Purchas LJ in Hamblett v Godfrey itself.103 |
A payment made to compensate for the loss of a contingent right (to a non-statutory redundancy payment) takes its character from the right it replaces. Since the non-statutory redundancy payment would have been tax-free, |