John Mander Pension Trustees Ltd v Revenue and Customs Commissioners
| Jurisdiction | UK Non-devolved |
| Judgment Date | 28 January 2013 |
| Neutral Citation | [2013] UKUT 51 (TCC) |
| Date | 28 January 2013 |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
[2013] UKUT 51 (TCC).
Upper Tribunal (Tax and Chancery Chamber).
Vos J.
Laurent Sykes (instructed by Ansons) for the appellant.
Akash Nawbatt (instructed by the Solicitor to HM Revenue and Customs) for HM Revenue and Customs.
The following case was referred to in the decision:
Whitney v IR CommrsTAX (1925) 10 TC 88
Income tax - Charge on retirement benefits scheme administrator on cessation of approval of scheme - Charge to tax arose when approval withdrawn - Tax charged on value of assets immediately before date on which withdrawal of approval took effect - Assessments in respect of right tax year - Current trustee liable to pay tax due under previous assessment as present administrator of scheme - Taxpayer's appeal dismissed - Income and Corporation taxes Act 1988, Income and Corporation Taxes Act 1988 section 591B section 591C section 591D section 658Ass. 591B, 591C, 591D, 658A.
This was an appeal by John Mander Pension Scheme Trustees Limited (JMP) from a decision of the First-tier Tribunal ([2011] UKFTT 686 (TC); [2011] TC 01528) dismissing its appeal against two assessments dated 27 July 2000 and 22 January 2007 made by the Commissioners for HM Revenue and Customs each in the sum of £475,200 under s. 591C of the Income and Corporation Taxes Act 1988.
The John Mander Scheme was created by a trust deed in 1987 and was approved by HMRC. In 1996 the funds of the scheme (£1,188,000) were transferred to another scheme. In 1997 HMRC wrote to the then trustees of the scheme indicating the reasons why they proposed to give notice under s. 591B(1) of the withdrawal of HMRC's approval for the scheme with effect from 5 November 1996. In 2000 HMRC informed the then trustees of the scheme, Louvre Trustees and TM Trustees, which was the independent pensioner trustee, that approval had been withdrawn with effect from 5 November 1996, and that tax would be chargeable under s. 591C of ICTA 1988 at the rate of 40 per cent on the value of the scheme assets on the day before cessation of approval. HMRC then issued an assessment in the sum of £475,200 addressed to Louvre. Louvre appealed against the 2000 assessment. The court dismissed an application for judicial review of the decision to withdraw approval. Louvre had resigned and the appellant JMP had been appointed as trustee. In 2007 HMRC issued an assessment in the sum of £475,200 addressed to JMP and TM Trustees. JMP appealed against the 2007 assessment. The FTT dismissed the appeals against the two assessments ([2011] UKFTT 686 (TC); [2011] TC 01528). JMP appealed.
There were two issues on the appeal, namely, whether the tax charged under the 2000 and 2007 assessments arose in the 2000/2001 or 1996/1997 tax year; and whether JMP was liable to pay the tax due under the 2000 assessment in its capacity as the present administrator of the scheme.
Held, dismissing JMP's appeal:
1.Section 591C(1) imposed the tax charge, stating expressly that, where an approval of a scheme ceased to have effect, "tax shall be charged" in accordance with that section. Section 591C(2) specified the amount of the tax charge, which was 40 per cent of the value of the assets which immediately before the date of the cessation of the approval of the scheme were held for the purposes of the scheme. The inclusion in that part of s. 591C(2) of the words "the date of the cessation of the approval of the scheme" had nothing to do with the imposition of the charge, only with defining its amount. The FTT was right that the words in s. 591C(1), "where an approval … ceases to have effect" was a reference to the decision by HMRC to remove approval, which in this case took place in 2000. Where s. 591D(7) provided that "The reference in section 591C(1) to an approval of a scheme ceasing to have effect was a reference to- … (b) the approval of the scheme being withdrawn under section 591B(1)", those words were not ambiguous, but clearly referred to the act of withdrawal rather than the date on which such withdrawal was expressed to take effect. Subsection 591D(7) went on to provide that "any reference in section 591C to the date of the cessation of the approval of the scheme shall be construed accordingly". The FTT was right that "construed accordingly" meant, in respect of s. 591D(7)(b) at least, construed in accordance with s. 591B(1). The FTT was therefore right to hold that reference in s. 591C(2) to the "date of the cessation of the approval" referred to the date from which the withdrawal of approval took effect. The FTT was right that the tax charged under the 2000 and 2007 assessments arose in the 2000/01 tax year.
2.Section 658A(1)(a) made clear that the tax that was charged on the administrator was to be treated as charged on every "relevant person", which included by s. 658A(2) those subsequently appointed, and that that tax should be assessable in the name of the administrator of the scheme. Therefore there was no need for the subsection to say expressly that every relevant person would be bound by that assessment, because s. 658A(1)(a) itself had made clear that an assessment in the name of the administrator was the way in which the charge on every relevant person was to be levied. Accordingly, JMP, as the current trustee of the scheme, was liable to pay the tax due under the 2000 assessment in its capacity as the present administrator of the scheme.
1.This is an appeal by John Mander Pension Scheme Trustees Limited ("JMPSTL" or the "Appellant") from a decision of the first-tier tribunal (tax) (Tribunal Judge Barbara Mosedale and Mr N Collard) (the "FTT") released on 28 October 2011 (the "Decision") dismissing JMPSTL's appeal against two assessments dated 27 July 2000 (the "2000 Assessment") and 22 January 2007 (the "2007 Assessment") made by the Commissioners for Her Majesty's Revenue and Customs ("HMRC") each in the sum of £475,200 (together the "Assessments") under Income and Corporation Taxes Act 1988 section 591Csection 591C of the Income and Corporation Taxes Act 1988 ("ICTA"). References to section numbers in this judgment are to ICTA, unless otherwise expressly stated.
2.The appeal raises two quite straightforward issues namely:
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(i) Did the tax charged under the 2000 and 2007 Assessments arise in the 2000/2001 or 1996/1997 tax year?
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(ii) Is JMPTL, the current trustee of the John Mander Limited Directors Pension Scheme (the "John Mander Scheme"), liable to pay the tax due under the 2000 Assessment in its capacity as the present administrator of the John Mander Scheme?
3.It is common ground that if the appeal were to fail on the first issue as to the correct year of account, the second issue would not matter to this appeal, since if the 2007 Assessment related to the 2000/2001 tax year, then it is acknowledged to be validly raised against JMPSTL. I shall need, however, to deal with both issues, whatever the outcome of the first, because it has been agreed that this is a lead case upon which other cases will depend.
4.In the course of argument, the parties have made some submissions concerning the background to and the propriety of the dealings of the John Mander Scheme and the reasons why HMRC withdrew its approval. As it seems to me, these issues have no bearing on the issues of statutory construction that have been raised by the appeal, and I do not intend to say any more about them.
5.On 24 September 1987, the John Mander Scheme was created by a trust deed and was approved by HMRC. The original trustees were Mr John Mander ("Mr Mander"), Mrs Elizabeth Mander ("Mrs Mander"), and Mr Alexander Jackson, who was the HMRC approved pensioner trustee ("Mr Jackson").
6.On 9 September 1994, DJT Trustees Limited ("DJT") replaced Mr Jackson as the approved pensioner trustee of the John Mander Scheme.
7.On 5 November 1996:
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(i) Mr and Mrs Mander resigned as trustees of the John Mander Scheme;
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(ii) Louvre Trust Company Limited was appointed as a trustee alongside DJT;
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(iii) The funds of the John Mander Scheme (£1,188,000) were transferred to the Vesuvius Shipping Limited Pension Scheme, set up by Vesuvius Shipping Limited, a company wholly owned and controlled by Mr and Mrs Mander.
8.On 18 March 1997, DJT resigned as a trustee of the John Mander Scheme.
9.On 20 June 1997:
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(i) Louvre Trust Company Limited resigned as a trustee of the John Mander Scheme.
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(ii) Mrs Mander and TM Trustees Limited, a new independent pensioner trustee, were appointed as trustees of the John Mander Scheme.
10.On 9 December 1997, HMRC wrote to each of Mrs Mander and TM Trustees Limited as trustees of the John Mander Scheme indicating the reasons why they proposed to give notice under Income and Corporation Taxes Act 1988 section 591B subsec-or-para 1section 591B(1) of the withdrawal of HMRC's approval for the John Mander Scheme with effect from 5 November 1996.
11.On 26 February 1998:
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(i) Mrs Mander resigned as a trustee of the John Mander Scheme; and
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(ii) Louvre Trustees Limited was appointed as a trustee of the John Mander Scheme.
12.On 19 April 2000, HMRC wrote to each of "The Louvre Trust Company" and TM Trustees Limited in the following terms:
For the reasons given in my letter of 3 March to Mr Warman, and in earlier letters, it is the opinion of [HMRC] that the facts concerning the administration of the [John Mander Scheme] no longer warrant the continuation of its approval under Section 591 [of ICTA]. [HMRC in exercise of its powers under Section 591B [of ICTA] has therefore decided to give notice that approval has been withdrawn with effect from 5 November 1996. …
From the date of withdrawal of approval the position will be as follows:
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(a) tax will be chargeable...
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