From: Alex Heney 
Newsgroups: uk.consultants uk.finance
Subject: Re: redundancy levels advice
Date: Mon, 19 Apr 2004 21:35:42 +0000 (UTC)

On 19 Apr 2004 11:27:55 -0700, didds2@excite.com (Ian Diddams) wrote:

>"Robin Graham"  wrote in message news:...
>> Redundancy payment is actually a technical term and the calculation of it is
>> under statutory control. However, you may wish to pay more than the
>> statutory amount, and there's nothing to stop you.
>
>
>quote from the IR :
>
>"Mrs X is entitled to statutory redunadancy pay which I have estimated
>to be ŁA (based on her previous year's salary - computation enclosed)
>which is an allowable deduction ....  However I cannot see that there
>is any commercial reason for the payment of the remaining ŁY"
>
>So the IR is trying to say that all that can be paid is SRP.
>
>
>Would we all agree that they are being perchance a trifle economic
>with the truth?
>

That depends to some extent on how economical you are being with it. I
don't mean to imply that you are lying, but you may be missing out
relevant facts.

>A client a couple of years ago made people redundant that had worked
>for them for no more than one full year - and paid them thirteen times
>the rate of SRP (3 months v 1 week) ...  and some of them would have
>had zero SRP I suspect.  So how was that a "commercial reason" ?
>

Provided there is no connection between the director(s) and those
being made redundant, and no realistic likelihood of them being taken
on again, then there doesn't need to be.

Once you get into connected persons, then you have to show that it
isn't just a means of diverting funds to avoid tax.

I would still say you should be able to pay more than SRP, but you may
have to justify it if it is a lot more.