TNAG-2430-FCO40-3532-Hong-Kong-Her-Majesty-s-Overseas-Civil-Service-(HMOCS)-poli-1992 — Page 39

Our Ref:

BY FAX

FILE Copy сору

ODA

Overseas Development

Administration

Abercrombie House, Eaglesham Road, East Kilbride, Glasgow G75 8EA

Direct Line: 0355-84 3576

GTN:

7243 3576

...

J Payne Esq

Board of the Inland Revenue

Room Fll (West Wing)

Somerset House

The Strand

LONDON

WC2R 1LB

Dear John

INCOME AND CORPORATION TAXES ACT 1988

1.

29 April 1992

!

We spoke on the telephone yesterday about the application of Section 188 of the Income and Corporation Taxes Act 1988. A copy is enclosed for ease of reference.

2.

As I understand it, this Section of the Act exempts certain payments, such as lump sum and compensatory awards from UK tax. Sub- paragraph (1)(f) covers the payment of compensation to those members of Her Majesty's Colonial Service (later to become Her Majesty's Overseas Civil Service · (HMOCS), who were employed in our former colonies at the time of Independence. These payments were made to members of HMOCS, under schemes administered by the overseas government, to facilitate "localisation". For example, an overseas officer could retire voluntary if he was directly superseded for promotion by a local officer, or he could vacate his post to make way for a local officer who was qualified to serve in that grade. Provision was also made in some schemes for an overseas officer to be permitted to retire if it was considered unreasonable to expect him to continue serving in a post which he had previously occupied, and where no equivalent post could be found. In all cases, however, compensation was paid for loss of future career prospects, whether the officer retired immediately or after the colony had attained Independence.

3.

One of the main features of the schemes introduced after 1961 is that compensation, whilst calculated as a lump sum, was paid by instalments spread over a number of years. The earlier schemes which provided for the payment of a single lump sum, tended to weigh the balance heavily in favour of the early retirement option. In an attempt to restore the balance, further measures were introduced to certain schemes, such as freezing the level of compensation at the most beneficial rate for those overseas officers who continued to serve the independent government, and extending the payment period over a number of years

usually five or six.

/4.

As you know,

Switchboard 0355-84 4000 Telex 263907-8 Fax 0355-84 4099