Page 155 - Bundle for MF Final

Bates no 154

APPLICATION FOR ASSISTANCE OF A M KENZIE FRIEND
c
PART 8: DETAILED COMMENTS

Tax "Income"· Banked (Not including transfers from, Return Tax Paid
Vear Savings) due Bank

April easyJet Shares Cirencester Total 3 pt Date
5th Januarv
2015 74,739.23 47,916.14 0 122,655.37 2016 3,574.76
PAYE April 2016
2016 75,066.78 13,468.10 88,534,88 2017 775.00
SA 137 ? Feb 2017
2017 955,706.71 4,861,72 53,405.88 1,013,974.31 2018 -2,086.00
SA April 2017
Total 1, 10S,S12. 72 66,317.24 53,405.88 1,225,251.68 2,263.76

157. The above table is provisional and subject to audit, but the broad position is believed
to be correct, although it does not include PAYE and on account payments.

158. The following narrative is intended to provide audit trail to check the applicable tax
rules and liability l3B_

• Under normal circumstances personal injury-accident insurance compensation is
exempt from Income Tax 139 and National Insurance. However, the TRl tax return
forms and notes - in use at the time - required disclosure of such benefits under the
heading of "Other UK income not included on supplementary pages" (Box 17) 140 • A
declaration was expected even when no tax was payable;

• Future loss of earnings for tax purposes is normally based on an Ogden Table type
calculation which offsets residual income from future employment;
• Everything 141 is based on net amounts. The AIG compensation ignored residual income
because the incapacity was said to be lifelong and prevented the applicant from ever
working again in his "chosen profession" as a pilot 142 ;

• Compensation which is paid gross is generally considered by HMRC to be taxable
because, by its nature, it exceeds the net financial loss suffered. HMRC will usually
accept as exempt from tax the net loss of future earnings if it restores the Claimant to
the position he or she was in before the event and no more.

• HMRC does not knowingly permit Claimants to make tax-free profits from excessive or
duplicative insurance claims and the proceeds of crime are always taxable.

• Specific policy wording usually clarifies where different companies insure the same risk.
Most insurers insist - on both application and claim forms - that they are advised of

7
13 Self-assessment?
138 It provisional and a work in progress
u The Gourley principle
9
140 as payments from a personal insurance policy for sickness or disability benents
141 but in the tax world there are always exceptions/
142 I.e. "own occupation" rather than any
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