SCA Packing Limited v Her Majesty's Revenue & Customs

Facts

SCA Packaging Limited, an international paper company with manufacturing plants across Great Britain, made a number of employees redundant at its Histon, Lydbrook and Edinburgh branches between 1996 and 2001. The severance payments generally included a sum calculated by reference to the unexpired notice period. The company did not deduct PAYE or National Insurance from that element, treating it as a redundancy payment falling within section 148 of the Income and Corporation Taxes Act 1988 rather than an emolument within section 19 of the Income and Corporation Taxes Act 1988. Its employees fell into three groups: non-office staff engaged in and after 1992, non-office staff engaged before 1992, and office staff. The first two groups received Written Statements under what is now section 1 of the Employment Rights Act 1996 referring to national and local agreements with the trade unions, including a Memorandum of Agreement on Protection of Employment and Compensation for Redundancy; office staff such as Avril Ferrari received statements making no reference to those agreements. The Revenue issued Notices of Determination for income tax and Notices of Decision for National Insurance for 1996-1997, 1999-2000 and 2000-2001, which the company appealed to the Special Commissioners.