UT (Tax & Chancery) UT-2024-000088 - [2025] UKUT 00374 (TCC)

There were two live issued before the FTT.

The first issue was whether the Payment falls to be treated as income arising from Mr Saunders’ employment. Mr Firth KC, who represented Mr Saunders before the FTT as he did before us, argued that the reward he had received for employment was not the Payment, but the contingent rights conferred by the SAR Agreement on grant. He submitted that those rights were themselves capable of being “rendered to pecuniary account” or monetarised, and that on the basis of the House of Lords decision in Abbott v Philbin [1961] AC 352, that was the relevant taxable event, not the subsequent receipt of the Payment.

The FTT rejected that submission, holding that Abbott did not mean that any deferred payment rights should be treated separately from the subsequent payment (Decision, [51]), and that it was necessary to focus on exactly what the employee had initially received. Having regard to the nature of the right granted here, they concluded that Mr Saunders’ receipt of the Payment arose from his employment relationship ([53]). The FTT also addressed the issue of whether, at the time of the grant, the rights afforded to Mr Saunders could be realised ([52]).

The second issue was whether, even if the Payment did constitute earnings, it was “for” the non-resident part of the split year, and was not apportioned over earlier (UK resident) years.

Mr Firth argued that the Payment was only earned at the time of the Sale, which was in the overseas part of a split year [61]. The FTT rejected that argument. Taking account of the “full picture”, they concluded that the Payment was earned by Mr Saunders for his services performed whilst he was resident in the UK in respect of duties performed there (Decision, [62]-[63]).

Mr Saunders appeals both findings.