Compensation for NHS Highland bullying victims won't be taxed

HMRC have confirmed they will not tax compensation made to victims of bullying within NHS Highland.

It emerged last year that due to payments being made through payroll, they were subject to tax treatment.

However, the health board wrote to HMRC in December to review the situation and victims will now not have their compensation taxed unless the payments are related to current employment.

It's understood the health board will reprocess payments automatically by February 26th to everyone who has received a payment through payroll, correcting the tax and NI position and issuing refunds as applicable.

NHS Highland say they're sorry for confusion and hurt caused as a result of the tax implications of the Healing Process payments not being highlighted earlier, and for making payments before obtaining clarification from HMRC.

Chief Executive, Pamela Dudek said: "We welcome the HMRC decision that the vast majority of Healing Process payments will not be subject to tax.

"And we sincerely apologise for upset and harm caused by the initial confusion on what the tax situation would be for this unique service.

"While we sought in good faith to make payments as quickly as possible once recommendations had been approved, in retrospect, delaying payment while we sought clarification from HMRC might have been advisable.

"We are pleased that participants in the process now have clarity, and we would encourage others who qualify to register with the service designed to help them heal.

"We have been unequivocal in our support of those who have experienced bullying and harassment. I would like to reaffirm that we are deeply sorry for the harm that has been caused to every one of those individuals."

Tory MSP Edward Mountain is delighted this has been resolved, but feels it could have been fixed when the healing process began in May 2020.

He said: "It should not have relied on my prompting for NHS Highland to finally write to HMRC on the 14 December 2020 to review the issue.

“I therefore welcome HMRC’s confirmation that NHS Highland made a mistake by subjecting compensation payments to tax treatment.

“The independent advice that I received prior to NHS Highland’s letter to HMRC confirmed that this would be the outcome, which is why I have pushed so hard to support bullying victims.

“This tax fiasco could have been avoided from the beginning had NHS Highland raised this issue with HMRC earlier.

"This would have spared bullying victims from a lot of additional pain, hurt and financial worries.

"I understand Shepherd and Wedderburn have also confirmed this to participants of the Healing process too.

“It is now vital that NHS Highland respects HMRC’s ruling and ensures victims now receive the correct amount of compensation they are owed and deserve as soon as possible.”

“This is a big victory for bullying victims and I am delighted that common sense has prevailed."

Labour MSP, David Stewart, is also happy with this outcome

He said: "This will come as a great relief to those being awarded money for the bullying and harassment they’ve endured,” he said.

"Constituents have been writing to tell me the huge amount of tax they have had to pay, sometimes on a relatively small amount of compensation.

"That has not only caused them further upset and harm, but in some cases has disrupted their benefit or pension payments.

"It is good that those who have already accepted compensation, and already have banked it, will be receiving a rebate of the tax."

The Healing Process is an independent service developed by NHS Highland in partnership with whistle blowers, colleagues and other stakeholders, with Scottish Government funding, to help individuals who have suffered from historical bullying and harassment while working for the health board in Highland and Argyll & Bute.

For those wanting to find more information on the decision on tax and National Insurance visit here