The end of the compromise agreement?

With effect from 6 April 2011, HMRC has issued new instructions which state that employers must withhold tax from payments made to an employee as if the employee is entitled to no allowances where:

 a new employee starts work without producing a P45;

 a payment which is not included in a P45 is made to an employee after they have left employment (for example, a termination payment).

 an employer starts paying an occupational pension to an existing employee in addition to their salary.

It is the second situation which may give rise to concern for employers particularly where they are entering into a compromise agreement. Watch this space for more details.