Compensation for early contract terminations
|Category|| Technical Articles
Article by Shiv Mahalingham, Energy Tax Group, Ernst & Young LLP. This article appeared in the May 2005 issue of Tax Adviser. There is a plenitude of written material in addition to the statutory and case law guidance in relation to the tax treatment of compensation receipts; the writer has found it useful to summarise this guidance into 3 considerations:
- What is the nature of the compensation receipt?
- What is the nature of the underlying asset (the contract) giving rise to the receipt?
- How important is the contract to the company’s trade structure or framework?
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