A manufacturer's agent had his contract terminated by the manufacturer whom he took to court for compensation under The Commercial Agents (Council Directive)Regulations 1993 (SI 1993/3053). He was awarded a significant sum for compensation and I can't get a definitive answer on how it should be taxed. The basis of the compensation calculation was the value of the agency as a business, using EBITDA and multiples for several years. This makes me lean towards treating the sums as a capital receipt subject to CGT and ER but the solicitor is arguing that it is like damages and therefore not taxable and a tax helpline I use thought it should be taxed as income (I don't agree with that because the payment is compensation and not indemnity)
Does anyone have any experience of how to tax such receipts?