Chidi Anthony Oti-Obihara v Commissioners for Her Majesty's Revenue and Customs
Decision date: 15 November 2010
Neutral citation: [2010] UKFTT 568 (TC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
The appellant received a £500,000 compromise payment after leaving Morgan Stanley; the tribunal had to decide how much was "received in connection with" termination for income tax purposes. It apportioned £165,000 of the settlement to financial loss connected to termination (£30,000 exempt), so £135,000 was taxable as an employment termination payment and £335,000 was not taxable. The appellant's self‑assessment is to be amended and steps taken to recover any over‑deducted tax.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: high
Where a composite settlement covers multiple heads (loss from termination and non‑pecuniary discrimination), the tribunal must apportion the total by reference to available evidence and the reasonable likely components of loss; only the portion compensating for financial loss caused by termination falls within the employment termination payment charge, while amounts for pure injury to feelings or non‑pecuniary discrimination do not.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The judgment notes that the Vento tariff for injury to feelings (and any inflation adjustment) is useful as guidance for awards but has limited direct application to negotiated settlements, particularly where aggravated or foreign‑law claims may justify larger sums; and that an employer’s deduction of basic‑rate PAYE on a post‑termination compromise payment does not determine the substantive tax character of the payment.