Termination exercises and payments remain a contentious area of employment tax, with HMRC always keen to examine the way terminations have been handled because of the significant scope for errors to arise. If you missed our recent webinar on termination payments you can still view it online here.

Aside from getting the technical details right, returning termination payments through RTI can be complex. Fortunately, HMRC has recently updated its RTI guidance on termination payments

All corporate directors must resign

The Companies Act 2006 has recently been amended to ban companies acting as the director for another company. The ban takes effect from October 2015 and corporate directors will have 12 months to resign (and perhaps be replaced by a natural person if the company policy or the articles of association require this) or Companies House will resign them automatically from October 2016.

In most such cases, the directing company will have designated a particular individual to represent it on the board of the other company with any payment for the services of the director going straight to the directing company. However, when such directors are replaced, this will no longer be an option and the payment of any fees for the new director's services will need to be considered very carefully – particularly if the individual is a non-executive director (NED).

A table of the potential PAYE implications of engaging NEDs is available to download but if in any doubt, taking direct advice on the tax position of NEDs is essential.

Collective consultation

The Court of Justice of the European Union (CJEU) has recently ruled on the Woolworths and Ethel Austin cases. The ruling considered the issue of how staff headcount is established in relation to collective consultation when terminations are to be made. The underlying rule is that where more than 20 redundancies are to be made at an establishment within 90 days, the employer must engage in collective consultation with the workforce.

The CJEU ruled that Woolworths correctly treated each of its shops (individual workplaces) as a separate establishment so that, for those with less than 20 staff, collective consultation was not legally required. The case has been referred back to the UK Court of Appeal but it is not expected to contradict the CJEU ruling.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.