27 August 2024
Hackett v HMRC: tax treatment of compensation payments
This appeal concerned the tax treatment of compensation payments made by banks to businesses, following an FCA review into the mis-selling of interest rate hedging products. The First-tier Tribunal, agreeing with HMRC, concluded that the payments were chargeable to income tax, being compensation for payments which had originally been deductible expenses of the business.
The Tribunal also commented on the length of the taxpayers’ written arguments, noting that the 58-page document contained full written submissions, and was not a skeleton argument. The Tribunal noted that there was a risk that a Tribunal might refuse to receive a document of this sort which was not in fact a skeleton argument.
Laura Poots appeared for HMRC.
A copy of the decision can be found here.
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