Commentary

B2.213 Voluntary payments

Business tax
Business tax | Commentary

B2.213 Voluntary payments

Business tax | Commentary

B2.213 Voluntary payments

Some voluntary payments are not required to be brought into the computation of trading profits. In deciding whether or not a voluntary payment is a receipt arising from the trade or profession carried on by the recipient, other cases on similar facts are limited in value. Each case has to be considered on its own merits1.

Compensation received for loss of office or business relationship

In John Reynolds & Co2 the High Court held that a purely voluntary payment to a trader on the termination of a trading relationship did not constitute trading income and was not taxable as such. The Court of Appeal3 confirmed the decision and held that such a receipt could not be properly described as annual profits or gains arising or accruing to the taxpayer company within the former ICTA 1988, s 18(1).

In Carnaby Harrower Barham & Pykett4 the taxpayers were a firm of chartered accountants who had acted for a number of years as the auditors of a motor insurance company and some of its associates. The accountants were not reappointed and were

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