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bigduckontax
bigduckontax, Accountant
Category: Tax
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I was on term sickness leave and had received income

Resolved Question:

I was on long term sickness leave and had received income protection insurance. After 1 year, the insurance offered a lump sum settlement. My company had made it obligatory that if I accepted the settlement, I will be terminated as well.
I am now appealing to the HMRC to consider my termination settlement payment as a result of Long Term Sickness.
How do I proof that clearly? HMRC has already refunded me my taxes on my income protection insurancement, but not my employment terminational settlement.
Submitted: 11 days ago.
Category: Tax
Expert:  bigduckontax replied 11 days ago.

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

I would suggest that the correspondence between you and the insurance company regarding the lump sum settlement would suffice.

I do hope that you have found my reply of assistance.

Customer: replied 11 days ago.
Of course I have provided the HMRC with the correspondence btw my and the income protection insurer. But the issue has nothing to do with the income protection insurer since the HMRC has already allowed their settlement payment to be tax free.MY ISSUE is my employer had given me a choice of either taking the income protection settlement payment and be terminated, or to keep receiving monthly income protection payments.Since I chose the lump sum payment, my company had terminated my job as well and had paid me a severance payment. It is this severance payment that the HMRC is arguing is not related to long term illness, and I'm appealing that it is.Otherwise, I would have been put on notice for poor performance, redundancy or been fired for gross misconduct, which are not the cases here.The QUESTION is how do I convince the HMRC that the settlement payment from my employer as a result of accepting the lump sum settlement payment from the income protection insurer is due to long term illness? That both are connected?
Expert:  bigduckontax replied 11 days ago.

Then use the correspondence between you and your employer leading to the termination of employment.

Customer: replied 11 days ago.
I have done that. I have sent them the correspondence with my employers as well. But unless the HMRC sees "ILL HEALTH DISMISSAL", they currently do not accept that my settlement payment from my employer is the SAME REASON as the settlement payment from my income protection insurer.And my company is UNWILLING to label my dismissal as ILL HEALTH, they label it as simply a SETTLEMENT AGREEMENT.Hence, I'm asking your opinion as a lawyer if there are other grounds that helps me proof to the HMRC by process of elimination that I'm not dismissed for any other reason (misconduct, performance, redundancy) than ILLNESS.
Customer: replied 11 days ago.
Both payments were paid out together in one lump sum, one figure from the income protection insurer and the figure from the employer as a settlement agreement.What else does the HMRC need to see to accept that they are both Long Term Illness related? What other types of dismissals can there be if the employer settlement agreement is not due to illness, misconduct, performance or redundancy?
Expert:  bigduckontax replied 11 days ago.

Your notice of dismissal must state the reason for the termination of your service. This should prove that your departure was not due to misconduct etc.

Actually, I am an accountant, not a lawyer, but employement law is a subject in the Certified Accountant's examination suite.

Customer: replied 11 days ago.
I think that was the issue. I did not get dismissed, hence, did not receive a notice of dismissal.My company had crafted a SETTLEMENT AGREEMENT so that no termination reason needed to be given seeing that it was an agreement between myself and my employer for me to be paid to leave. It was contingent upon me accepting the income protection insurer's settlement. Hence, the company didn't need to jump through any hoops to dismiss me for ill health, misconduct, performance etc. and took this sterile method instead.I'm just wondering if you had any experience presenting a Settlement Agreement that came from an income protection settlement as termination due to long term illness. I AM suffering from long term illness and it can be proven that it takes a long time to recover especially from my psychiatric and occupational health notes during my long term sick leave.However, it is the method with which my company parted with me via a Settlement Agreement instead of a Dismissal due to Long Term Illness that's preventing the HMRC from giving me tax-free payment. The reasons leading to the settlement agreement for at least 1.5 years are all 100% related to long term illness and nothing else.Any ideas how to convince them?
Expert:  bigduckontax replied 11 days ago.

Perhaps I used the wrong terminology. On termination of employment you must receive a certificate indicating your period of employment and the reason for its ending. That was the document to which I refer.

Customer: replied 10 days ago.
Gotcha, I definitely never received such a document. Do you know what it's called? I only received one Settlement Agreement that I signed and in it, it's stated that both parties mutually agree to separate with a agreed sum to be paid to me.
Expert:  bigduckontax replied 10 days ago.

Here is the ACAS guidance on the subject:

'An employment contract can be terminated at any time by either party, it could be a resignation or dismissal, redundancy or retirement. For a notice to be effective it should be in writing and specify the date of termination.'

The Settlement Agreement would appear to comply with this requirement.

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Expert:  bigduckontax replied 5 days ago.

Thank you for your support.

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