My farming client was in dispute with the Rural Payments agency about their single farm payments over a number of years.
Due to an administrative error on RPA part they had to pay him £60,000 that he wasn't in fact entitled to, due to time deadlines and time limits generally.
This is in effect an ex gratia payment simply because if the RPA wanted to avoid paying the money they had to go through a few hoops most of which they missed.
My question is basically because the money was not generated by the farming business, is it taxable? If it isn't, why isn't it, or more importantly if it is, why is it?