Corporation Tax Act 2009 section 1243

Payments made by the Government

Section 1243 deals with the tax treatment of government-funded redundancy or contractual payments made on behalf of investment companies, and what happens when the employer reimburses the government.

• Where an investment company owes a redundancy or approved contractual payment, the government may step in and pay the employee directly under employment rights legislation.
• The relevant government bodies are the Secretary of State (under the Employment Rights Act 1996) in Great Britain and the Department for Employment and Learning (under the Employment Rights (Northern Ireland) Order 1996) in Northern Ireland.
• If the employer reimburses the government for the payment made, the reimbursement is treated as though the employer had made the redundancy or approved contractual payment itself.
• This treatment allows the reimbursement to qualify as a deductible expense of management under the same rules that apply to direct redundancy and approved contractual payments made by investment companies.