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HMRC v Julian Martin [2014] UKUT 429

Clawback of joining bonus was negative taxable earnings

Clawback clauses providing that an employee must pay back part of a bonus or other sum paid for a benefit in the event that he leaves employment early are relatively common. In HMRC v Julian Martin, the issue was whether tax on the bonus paid up front should still be paid on the sum repaid to the employer.

Mr Martin had been required by his employer, JLT, to enter into a new employment contract under which he received a signing on bonus of £250,000, with an obligation to make repayment of all or part in certain events of termination. The new contract also contained post termination restraints. 

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