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Insurance proceeds taxable ?
Posted by Anonymous on Fri, 03/07/2009 - 09:44
A four partner medical practice had an internal dispute, and one partner left, enjoying a significant profit enhancement as an inducement to persuade him to leave. The remining partners claimed against a general partnership policy which covered certain extraneous risks, and the insureres paid a sum broadly equal to the enhanced profit share enjoyed by the outgoing partner.
The payment seems neither to be subject to CGT by virtue of TCGA s204, nor does it relate to profits-is it a tax nothing or is that too optimistic ?
Hippocrates
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Insurance proceeds taxable.
I believe that the cost of insurance premiums to cover locum costs during sickness of a partner were once not allowable. However since HMRC has allowed them it has said that the proceeds of such policies form part of practice income and as such are taxable.
I suggest that this ruling may have a bearing on this matter. It would be worth checking out.