Deferred compensation

A company had an offshore project and was paying UK based management employees under PAYE. The project faltered and the company agreed with the employees to accrue compensation due at that point (no further salaries were paid and PAYE was suspended, although it reported annually and P60s issued etc) until the project was sold some years later. The proceeds of the sale will be used to pay the partial o/s balances to the employees by negotiation. The company had no other activities in the interim or funding until the project was disposed of although management conducted a non paying caretaker role until the project was disposed of. Query: Is it correct that the lump sum payment will then trigger the necessary company related employee taxes for the year in which it is to be paid (2023) and not for any of the prior years as no activity occurred. I would presume this also applies to the employee personal tax declarations to be made .

Hi G D,

This case could be quite complex, can you please contact us on 0300 200 3200 to discuss this further.

Thank you.