O'Brien v. Benson's Hosiery (Holdings) Ltd. (1979), 53 TC 241 (HL)

A payment of 50,000 pounds by a marketing director to his employer, the taxpayer, in consideration of his release from his service contract was held to constitute the disposal of an "asset" within the meaning of s. 22(1) (quoted above). Lord Russel stated: "If, as here, the employer is able to exact from the employee a substantial sum as a term of releasing him from his obligations to serve, the rights of the employer appear to me to bear quite sufficiently the mark of an asset of the employer, something which he can turn to account, notwithstanding that his ability to turn it to account ... by a type of disposal [is] limited by the nature of the asset."

A payment of £50,000 by an employee to his employer in consideration of his employer releasing him of all obligations under the employment contract was held to be a capital sum chargeable to capital gains tax under the Finance Act, 1965 (U.K.). At issue was whether the employer corporation should be considered to have realized a chargeable gain in respect of the disposal by it of an "asset", which was defined in subsection 22(1) of the Finance Act 1965 to include "all forms of property". Lord Russell stated the following (at p. 270):

"If, as here, the employer is able to exact from the employee a substantial sum as a term of releasing him from his obligations to serve, the rights of the employer appear to me to bear quite sufficiently the mark of an asset of the employer, something which he can turn to account, notwithstanding that his ability to turn it to account by a type of disposal is limited by the nature of the asset."