Case details
Summary
Where a tax charge follows the ending of approval for a retirement benefits scheme, the relevant year depends on the statutory route by which approval ends. Under section 591B(1) of the Income and Corporation Taxes Act 1988, the charge under section 591C(1) arises in the year when approval is withdrawn by notice. An earlier date specified in the notice as the effective date of cessation does not determine the year of assessment, although it remains relevant to valuation and statutory conditions. Section 591C(2) identifies the charging Case, rate and method of quantification; it does not itself impose the charge.
Factual background
The appellant was the trustee and administrator of an approved pension scheme. HMRC notified the former trustees on 19 April 2000 that approval was withdrawn with effect from 5 November 1996. Assessments were issued for 2000/2001, including a protective assessment. The First-tier Tribunal, in [2011] UKFTT 686 (TC), and the Upper Tribunal, in [2013] UKUT 051 (TCC), held that 2000/2001 was the correct year of charge. The appellant argued that the charge arose in 1996/1997, relying on sections 591C and 591D of the Income and Corporation Taxes Act 1988. The central issue was whether the relevant date was the effective cessation date stated in the notice or the date on which approval was withdrawn.
Held
Appeal dismissed unanimously. Moses LJ gave the leading reasons. Patten LJ agreed with them, and Beatson LJ agreed with both judgments.
- Nature of the charge. Section 591C(1) of the Income and Corporation Taxes Act 1988 imposes the tax charge when approval ceases to have effect through one of the three statutory mechanisms. Section 591C(2) identifies the Case under which the tax is charged, the rate and the method of quantifying the amount; it does not impose the charge or determine the year of assessment.
- Three statutory routes. Sections 591A(2) and 591B(2) operate automatically. In those cases, the relevant year is identified by the date or event on which approval ceases to have effect. Section 591B(1) is different because it involves both HMRC’s decision to withdraw approval and a date specified in the notice from which the withdrawal is effective.
- Withdrawal under section 591B(1). Section 591D(7)(b) refers to the approval being withdrawn. It therefore identifies the date on which HMRC gives the notice of withdrawal as the date on which the section 591C(1) charge arises. The date specified in the notice as the effective cessation date remains relevant to the valuation of assets and the statutory conditions, but it does not determine the year of assessment.
- Alternative arguments. Section 61(3) of the Finance Act 1995 did not alter the construction of sections 591C and 591D. Nor could section 591B(1) operate prospectively to impose tax or interest before approval had been withdrawn, absent clear words creating a retrospective charge.
Approval was withdrawn in the 2000/2001 tax year. The assessments were therefore made for the correct year.
The court’s approach to earlier authorities
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Appellate history
- Court of Appeal (Civil Division) — Appeal dismissed. The Court held that the relevant year of assessment was 2000/2001.
- Upper Tribunal (Tax and Chancery Chamber) — In [2013] UKUT 051 (TCC), the Upper Tribunal held that the correct year of charge was the year to 5 April 2001.
- First-tier Tribunal — In [2011] UKFTT 686 (TC), the Tribunal reached the same conclusion.
Lower court decision
Appeal to higher court
Key cases cited
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