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Where Taxpayers and Advisers Meet

Tax liability for compensation payment

Ianchris
Posts:2
Joined:Wed Feb 28, 2018 3:26 pm
Tax liability for compensation payment

Postby Ianchris » Wed Feb 28, 2018 3:35 pm

I understand that most types of compensation that are paid to individuals are tax free, but does this apply to a residents limited company. The residents company is due to receive an inconvenience compensation payment from developers working on land adjacent to our property.

Thanks in advance for any advice you may be able to offer

RMC
Posts:435
Joined:Wed Aug 06, 2008 3:35 pm

Re: Tax liability for compensation payment

Postby RMC » Sun Mar 04, 2018 8:34 am

Could it be said that it was not the company who suffered inconvenience but the residents, and the compensation belongs to them? Unless of course the company incurred or will incur expenditure on works to rectify any problems caused by the developers.
If the company does not wish to pay the money to the residents, for example if it is needed for improvements and the residents agree, it should be treated as residents’ contributions or loans.

Ianchris
Posts:2
Joined:Wed Feb 28, 2018 3:26 pm

Re: Tax liability for compensation payment

Postby Ianchris » Sun Mar 04, 2018 10:11 pm

Thanks for the suggestions. I have been thinking along the same lines.


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