NHS Highland has apologised to bullying victims for the “confusion and hurt” they suffered after being told their compensation payouts would be subject to tax.
The decision was overturned following a review by HMRC, which said payments made with reference to harm and healing are not taxable.
The health board, which covers the Highlands and Argyll and Bute, was heavily criticised after an investigation last year found hundreds of NHS staff across the region may have endured inappropriate behaviour.
The Sturrock review found a “significant majority” of the 340 people it spoke to were either currently experiencing, or had suffered in the past, fear, intimidation and inappropriate behaviour at work.
The Healing Process’s Independent Review Panel (IRP) confirmed that none of the payments it has recommended to date were to compensate for lost earnings whilst in employment – meaning none are subject to tax.
NHS Highland apologised for the “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”.
Pam Dudek, NHS Highland Chief Executive, said: “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.”
Highlands and Islands Labour MSP, David Stewart, said the decision to not tax compensation payouts was a victory for common sense.
He said: “This will come as a great relief to those being awarded money for the bullying and harassment they’ve endured.
“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.”
Conservative MSP Edward Mountain said he was delighted that HMRC had overturned the decision to tax compensation payouts.
He said: “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.”