Under police procedures, officers found guilty of offences
against discipline may be required to resign immediately. However
the Police Acts allow for an appeal process which can lead to the
officer being reinstated, with full arrears of pay, under an order
made by the appropriate Secretary of State.
The appeal process can take many months. An arrears payment
following reinstatement could therefore relate to arrears of pay
for more than one year of assessment, and could at the time of
payment trigger a liability to higher rate tax that would not
normally arise. The arrears payment must be assessed in the year of
receipt following the normal principles of receipts basis in
EIM42260 onwards.
Do not accept that an order for reinstatement creates an
entitlement to payment of earnings (see
EIM42290) at a date that falls earlier
than the date of the order made by the appropriate Secretary of
State. For example, if a police officer was required to resign in
December 2004 and, following a successful appeal, was reinstated by
an order signed by the Secretary of State in July 2006, the
reinstated police officer has no entitlement to a payment of
arrears until July 2006 Receipts basis applies and the arrears are
all taxable in 2006/07.
