MR ANANTKUMAR MEGHJI PETHRAJ SHAH v THE PENSIONS REGULATOR [2023] UKUT 00183 (TCC)
| Jurisdiction | UK Non-devolved |
| Judge | JUDGE TIMOTHY HERRINGTON,MEMBER MICHAEL HANSON,MEMBER PETER FREEMAN |
| Subject Matter | 28 July 2023 |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Published date | 31 July 2023 |
UT Neutral citation number: [2023] UKUT 00183 (TCC)
Case Number: FS/2020/0004
UPPER TRIBUNAL
(Tax and Chancery Chamber)
Hearing Venue: The Rolls Building, London EC4A 1NL
PENSIONS REGULATOR-contribution notice-whether applicant party to act or series of acts
causing material detriment to pension scheme-yes- whether reasonable to impose on the applicant
the sum specified in the contribution notice-yes-reference dismissed
Heard on: 9,10,11,15 & 16 May
2023
Judgment date: 28 July 2023
Before
JUDGE TIMOTHY HERRINGTON
MEMBER MICHAEL HANSON
MEMBER PETER FREEMAN
Between
MR ANANTKUMAR MEGHJI PETHRAJ SHAH
Applicant and
THE PENSIONS REGULATOR
Respondent
Representation:
The Applicant in person
For the Respondent: James Walmsley and Nicholas Macklam, Counsel, instructed by The Pensions
Regulator, for the Respondent
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DECISION
Introduction
This decision concerns a reference made under s 103 Pensions Act 2004 (“PA 2004”). The
reference relates to a determination (“the Determination”) made on 10 June 2020 by the
Determinations Panel (“DP”) of the Respondent. The Pensions Regulator (“the Regulator”)
contends that a contribution notice (“CN”) should be issued under s 38 PA 2004 to the
Applicant, Mr Anantkumar Shah (“Mr Anant Shah”).
The amount specified in the Determination to be paid was £3,688,108. The DP determined
by a majority that a CN should be issued to Mr Anant Shah and his nephew, Mr Rohin Shah,
on a joint and several basis for the amount so specified.
Both Mr Anant Shah and Mr Rohin Shah referred the Determination to the Tribunal by
separate reference notices dated 7 July 2020. Mr Rohin Shah withdrew his reference on 7
March 2023 after a settlement was reached between Mr Rohin Shah and the Regulator.
Accordingly, Mr Rohin Shah is no longer a target of regulatory action and this decision deals
purely with the determination of Mr Anant Shah’s reference.
The background facts set out at [5] to [14] below are undisputed.
The Regulator’s case for a CN case relates to the Meghraj Group Pension Scheme ("the
Scheme"). The Scheme is a defined benefit occupational pension scheme which was founded
by Meghraj Group Limited (“MGL”) by a declaration of trust dated 1 July 1987. MGL was
the UK holding company for the Meghraj group of financial services companies.
One of the companies in the Group, Meghraj Financial Services Limited ("MFSL"),
became the principal employer of the Scheme on 1 January 2001. Mr Anant Shah was a
director of MFSL as from MFSL’s incorporation on 27 March 2000, having been one of a
number of directors from 27 March 2000 and its sole director from 9 August 2010.
The Scheme is currently being assessed by the Pension Protection Fund (“PPF”)
following MFSL's entry into creditors' voluntary liquidation on 9 October 2014. As at that
date the debt to the Scheme owed by MFSL under s 75 of the Pensions Act 1995 (“PA 1995”)
has been estimated by the Scheme Actuary at £5.85 million.
From at least 31 December 2001, MFSL was the sole legal owner of a company called
Meghraj Properties Limited ("MPL"). MPL in turn owned shares in a joint venture company
in India (“the Indian JV"). MPL employed five members of the Scheme. Mr Rohin Shah, who
is the nephew of Mr Anant Shah, was a director of MPL from March 1995.
Between 2007 and 2011 MPL received large sums of money from the disposal of its
shares in the Indian JV, as well as sums from dividends on those shares. Most of these sums
were paid to MFSL and accounted for in MPL's accounts as paid out by way of dividend.
Most of those payments were then paid by MFSL to its parent company, M.P. Group
Limited (a company incorporated and registered in the Isle of Man) ("MPGL"). Of those
payments to MPGL, some were used to fund payments to an offshore foundation called the
Animegh Foundation and others were paid by MPGL to a company registered and
incorporated in Jersey, called Whiteoak Investments Limited ("Whiteoak"). This was a
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nominee company of Mr Rohin Shah and the money paid to Whiteoak was paid to it for the
benefit of Mr Rohin Shah.
The Animegh Foundation has been described by Mr Anant Shah as a discretionary
settlement for the wider Shah family, settled by his brother, Mr Vipin Shah, and from which
he says he has received no distribution.
On 18 May 2012, MFSL (acting by Mr Anant Shah) and MPL (acting by Mr Rohin
Shah) entered into an agreement (the “2012 Agreement”) which provided that the final tranche
of the proceeds of MPL’s sale of the Indian JV were to be paid to Paramount Properties
Limited (“PPL”), a Jersey company which was the nominee vehicle of Mr Rohin Shah.
In January 2014, MPL received the last tranche of proceeds from the sale of its shares in
the Indian JV. The sum paid was £3,688,108 ("the 2014 Payment"). It was not paid by way of
dividend through MFSL and MPGL, but paid directly by MPL to PPL at the direction of Mr
Rohin Shah.
Following the settlement with Mr Rohin Shah, in these proceedings the Regulator asks
that the Tribunal direct the issue of a CN pursuant to which Mr Anant Shah is required to
contribute £1,844,054 to the Scheme (this being 50% of the 2014 Payment), plus an uplift for
the passage of time since 2014. The Regulator contends that Mr Anant Shah was party to a
series of acts which engage the CN jurisdiction under s 38 PA 2004 by causing the Scheme to
suffer material detriment (alternatively, by having the main purpose of preventing recovery of
s 75 PA 1995 debts from MFSL and/or MPL).
The series of acts relied on by the Regulator is the entry into the 2012 Agreement (“the
2012 Act”) and the making of the 2014 Payment (the “2014 Act”). Alternatively, the
Regulator relies upon Mr Anant Shah being a party, not to a series of acts, but to the 2012 Act
and/or 2014 Act taken individually, and the material detriment caused by and/or the main
purpose of each of the relevant act or acts.
The Regulator’s primary case that the series of acts caused material detriment to the
Scheme is based on a contention that arrangements entered into between Mr Rohin Shah and
Mr Anant Shah in 2004 (“the 2004 Agreement”) pursuant to which they agreed that the benefit
of the profits earned from MPL, primarily derived from that company’s interest in the Indian
JV, should belong 80% to Mr Rohin Shah and 20% to Mr Anant Shah did not create a legally
binding arrangement whereby ownership of the interest in the Indian JV had effectively left
MPL at that point. Mr Anant Shah’s position on the 2004 Agreement is that it created a legally
binding contract and accordingly the 2012 Agreement simply restated the position that had
been agreed back in 2004.
Mr Anant Shah contends that no CN should be issued against him. He denies that the 2012
Agreement led to Mr Rohin Shah making the 2014 Payment in the manner alleged as a matter
of causation. He also says that the 2014 Payment was made without his knowledge or consent.
Mr Anant Shah denies that it was a consequence of the 2012 Agreement or the 2014
Payment that none of the proceeds of sale from the final tranche of shares in the Indian JV
were used to fund the Scheme's deficit. He says that as at 18 May 2012 MFSL was the sole
statutory employer in relation to the Scheme. MFSL had no entitlement to the proceeds of sale
in relation to the remaining shares in the Indian JV as a consequence of the 2004 Agreement.
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