How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Sam Your Own Question
Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 7276
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
16196420
Type Your Tax Question Here...
Sam is online now

My former employer owes me over £62000 in unpaid wages. They

Customer Question

My former employer owes me over £62000 in unpaid wages. They acknowledged the debt and asked me to defer payment of it for a year which I agreed to. Now that year is up and I have requested that the debt is paid but the company has said it has no funds. I know this to be true. However, the parent company (who I didn't have an employment contract with) has offered to 'gift' me £20000 if I will agree not to issue a winding up order against my former company.
In order to properly consider this offer, I need to know what the tax position is. So my questions about tax are:-
Would I have to declare and pay tax and NI on the £20000?
Are payments from the national insurance fund as a result of a company being insolvent subject to tax and NI?
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. It appears to me that issuing a winding up order to recover your wages, where a company has no funds, is an exercise in financial futility. By being offered 20K in compensation you are being fobbed off. There is a possibility that by offering this the parent company may be admitting the debt of their subsidiary. You really need to consult a local, trusted solicitor to act for you in this matter; the sums involved are large. Were the 20K compensation then there would be no tax or NI involved.. I am a tad puzzled by your last sentence 'payments from the NI fund et seq.' Could you please expand?

Related Tax Questions