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, Accountant
Category: Tax
Satisfied Customers: 7509
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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?