Commentary on Sections Example 3 Ne = £5,000; Da = 183; De = 183; Smg = 0 Section 395: Application of sections 396 and 397: general rules
1702.This section applies if the benefit received is a lump sum. It derives from section 596A(8), (9) and (15) of ICTA.
1703.The section has two functions.
1704.First, it introduces sections 396 and 397. Section 396 exempts the charge under section 394 if certain conditions are met. Section 397 modifies the charge under section 394 if certain conditions are met.
1705.Second, it sets out the condition that is common to both sections 396 and 397 and which must be met if either section is to apply.
1706.The common condition is given in subsection (4). It derives from sections 596A(8) and (9) of ICTA. The employer has to have paid a contribution or contributions with a view to providing the benefit and the employee has to have been assessed to tax in respect of that contribution or contributions. The assessment may be under section 595 of ICTA or section 386(1) of this Act depending on when the contribution was made.
1707.Subsection (5) puts the onus on the taxpayer to show that the conditions in subsection (4) are satisfied. It derives from the assumptions in section 596A(15) of ICTA.