The appeal related to the treatment for income tax purposes of the sum of £30,000 which the claimant received under the terms of a compromise agreement. The claimant was transferred under TUPE after being seconded to the transferee. He was unhappy with having to travel further than his original contract stipulated and agreed to resolve his grievance by accepting £30,000 as settlement. HMRC assessed the claimant to income tax in respect of the £30,000 so received on the basis that it fell within the definition of earnings in Part 3 Income Tax (Earnings and Pensions) Act 2003 ("ITEPA"). The claimant contended that the sum in question fell within the terms of Chapter 3 of Part 6 ITEPA (which covers, inter alia, sums paid on the termination of employment) and was therefore exempt from income tax because it did not exceed the threshold of £30,000.

The FTT dismissed the appeal. First, there was a continuing employment and, secondly, the payment clearly related to the claimant's location following the transfer under the TUPE Regulations and not his location before then. At no point during the period of his secondment did the claimant allege that the transferor was in breach of contract and demand compensation for that breach. The issue arose only when the secondment came to an end and the transfer under the TUPE Regulations occurred. Those facts, coupled with the provision in paragraph 9 of the compromise agreement requiring all or part of the payments to be refunded in the event that the claimant's employment with the transferee terminated within 2 years of the payment date, show that the payments were referable to the claimant's continuing employment on and after the transfer.

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