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Posted Wed, 09 Nov 2022 10:11:39 GMT by Bertoli
I have been supporting a friend for the last couple of years who owned a small Limited Company. I have been supporting him with ideas, suggestions, advice and help on production and on general business issues and problems; he has paid me a small commission based on sales for this help. He has recently sold the Company and wants to pay me a one off payment to say thank you for my help. I was not expecting this so it has come as a nice surprise. The payment is from him personally and not from the old Limited Company. I have tried to research whether I can just view this as a simple gift or whether I should treat it as income and pay income tax? I have come across BIM41805 an HMRC guidance note and some legal cases which have cropped up while looking including Simpson v John Reynolds, Murray v Goodhews and Walker v Carnaby and these case seem the closest to my situation and suggest the gift can be treated as a gift and not as income. It seems quite tricky to decide though because there appear to be other cases which take a different view. My normal day job as as a self employed engineering consultant which is a full time business so my help to my friend tended to be outside of normal hours. Does HMRC have any suggestions or guidance Thank you
Posted Mon, 14 Nov 2022 16:30:40 GMT by HMRC Admin 18
Hi,

From the information you have given, you meet the conditions outlined at Business Income Manual and as such, the payment would be considered a gift,

Thank you.

 

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