Equity Trust (Singapore) Ltd v Revenue & Customs

For Condition B of regulation 2(3) of the Overseas Pension Schemes Regulations 2006, a system for approving, recognising or registering pension schemes need not extend to every type of pension scheme, or to schemes of the type under consideration. A system may exist even if it is used infrequently, operates through unpublished but knowable procedures, and exists for income-tax purposes only. Primary condition 1 requires genuine practical accessibility to residents of the relevant country. A recital stating that a scheme is open to those residents is not conclusive. The court may examine how the scheme operated in practice and draw inferences from the surrounding evidence.

The claimant, trustee of a Singapore pension scheme, challenged the withdrawal of the scheme’s qualifying recognised overseas pension scheme status. The proceedings concerned two questions under regulation 2(3) of the Overseas Pension Schemes Regulations 2006: whether section 5 of the Singapore Income Tax Act 1948 supplied a system for approval or recognition of pension schemes, engaging Condition A rather than Condition B; and whether the scheme was open to persons resident in Singapore for the purposes of Primary condition 1.

The claim had initially raised only the Condition B issue, but the Primary condition 1 issue was added after further evidence was filed. The central questions were whether a limited overseas approval system was sufficient to prevent Condition B from applying, and whether the scheme was genuinely accessible to Singapore residents.

1. The court answered the Condition B question “yes”. Section 5 of the Singapore Income Tax Act 1948 applied only to a distinct subset of pension schemes, corresponding broadly to occupational pension schemes in the United Kingdom. That limitation did not prevent it being a system for the approval, recognition or registration of pension schemes. Condition B did not require the absence of a system covering every form of pension scheme, or schemes of the same kind as ROSIIP.

2. The section 5 mechanism remained a system notwithstanding infrequent use, the absence of formal publication, and the fact that its requirements were communicated through practice. It was operable and capable of being applied. Condition B imposed no requirement that the system operate for purposes extending beyond income-tax legislation. Accordingly, Condition A was the applicable condition, but it was common ground that Condition A was not satisfied.

3. Primary condition 1 required the claimant to establish that the scheme was genuinely open to Singapore residents as a practical matter. The existence of a wide trustee discretion to refuse applicants did not automatically defeat the condition. However, the court was entitled to look behind a recital in the trust deed and examine the scheme’s actual operation.

4. The evidence showed that the scheme had consistently been presented to the Singapore tax authorities as a foreign trust whose members were non-resident, and its operational checklist required non-Singapore residence. The evidence of Singapore-resident members was limited and was capable of being explained as oversight or mistake. On the balance of probabilities, the claimant had not proved that the scheme was genuinely open to Singapore residents.

5. The Revenue therefore succeeded on both questions. The claim failed because Condition A was not satisfied and Primary condition 1 was not established.

The judgment was a first-instance decision. The judgment refers to an earlier interlocutory decision by the Deputy Judge, [2010] EWHC 2996 (Ch), which refused the Revenue’s strike-out application.