Matters relating to tax in redundancies and tax indemnities in compromise agreements can be tricky.
Although compromise agreements usually state redundancy pay is in full and final settlement and there will be no deductions of tax from the redundancy payment, tax indemnities mean, if the calculations for redundancy pay are incorrect and HMRC has sent a demand or assessment to the past-employer, on behalf of the employee, the employer would pay the demand and claim an indemnity from the employee.
As employment law solicitors, we always advise that if an employer has a tax indemnity, the ex-employee is given the choice/option to negotiate with HMRC before the ex-employer pays to try and ensure that the ex-employee is not left with the bill.
If you require further information about UK employment law or seek clarification with regards to the terms of your compromise agreement, please contact us at enquiries@rtcooperssolicitors.com or visit one of the following pages on employment law:
- http://www.rtcoopers.com/practice_employment.php
- http://www.rtcoopers.com/faq-redundancyemployee.php
- http://www.employmentlawyersinlondon.com/video.php
- http://www.employmentlawyersinlondon.com
- http://www.compromiseagreementlonuk.com/
© RT COOPERS, 2012. This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.
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