Capital gains v Income tax on indemnity proceeds

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I have looked at the Murray v Goodhews case and ESC D33 and it appears my client's indemnity receipt comes under Income tax. It was calculated under the regulations 17(3), (4) and (5) of the Commercial Agents (Council Directive) regulations 1993 and based on one year calculated from the annual remuneration over preceding five years. A payment was made several years ago to buy the agency (sales territory) to the principal; on the basis that the claim for this was drawn the principal would offer to pay my client the indemnity which was a greater sum than that paid to buy the agency. I have seen earlier postings on AWEB but still not totally sure I am correct on the Income tax basis. It is either IT or CGT, but D33 says it might be exempt from tax.

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By Kosher
10th Dec 2023 18:22

Had another look at ASC D33, and because the indemnity receipt is based on income lost it appears that it is saying that the receipt is trading income. But we still have the original cost of the sales territory, where there is no claim against the principal company; this seems to suggest a capital receipt. So we have two conflicting answers to my question. The difference between trading receipt and capital receipt is an additional £16,000 tax.

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