Toni Fox-Bryant & Anor v The Financial Conduct Authority

In calculating disgorgement within a financial penalty, the regulator may deduct the appropriate tax adjustment and add interest to the net figure, provided the calculation follows the Tribunal’s prescribed methodology. Pension-related disgorgement should identify the contributions attributable to the relevant misconduct and add the corresponding proportion of the pension fund’s investment return. Existing pension funds containing other monies must therefore be apportioned rather than treated wholly as disgorgeable. A tax adjustment for pension disgorgement is unnecessary where the individual does not intend to withdraw pension funds to pay the penalty. The individual’s means are irrelevant to calculating disgorgement, although they may bear on enforcement.

The Applicants referred to the Tribunal Decision Notices imposing financial penalties, prohibition orders and withdrawal of approvals. The Tribunal had already dismissed the References concerning the prohibition orders and withdrawals of approval in the November Decision, [2024] UKUT 00357 (TCC). In the March Decision, [2025] UKUT 00087 (TCC), it explained the method for calculating the disgorgement element and remitted the calculation to the Financial Conduct Authority.

The Authority recalculated the penalties. The Applicants accepted the interest methodology and did not challenge the general mechanism for a tax credit, but raised concerns about the treatment of pre-existing pension funds and the underlying assumptions. The issues were whether the Authority had correctly applied the March Decision and whether any further adjustment was required.

1. Financial penalties approved. The Tribunal approved the Authority’s calculations under section 66 of the Financial Services and Markets Act 2000 and directed it to issue final notices with the recalculated penalty amounts.
2. For non-pension income, the correct approach was to take the unchallenged gross disgorgement figure, deduct the calculated tax adjustment, and add interest at the Bank of England official rate, compounded every six months, to the net figure. This followed the methodology stated in the March Decision.
3. For pension-related amounts, disgorgement comprised the contributions made by CFP together with the proportion of the pension scheme’s total investment return represented by those contributions. This appropriately excluded other, pre-existing pension monies from disgorgement.
4. No tax adjustment was required for pension disgorgement because the Applicants had indicated that they did not intend to withdraw pension funds to pay that part of the penalty.
5. The Applicants’ means were not relevant to calculating disgorgement. Questions concerning enforcement of the penalty were distinct from the calculation of the amount to be disgorged.
6. The previously dismissed References concerning the prohibition orders under section 56 and withdrawal of approvals under section 63 remained dismissed.

The judgment was the Tribunal’s third decision in references arising from Decision Notices dated 3 May 2023.

• Upper Tribunal (Tax and Chancery Chamber): In [2024] UKUT 00357 (TCC), the Tribunal dismissed the References concerning the prohibition orders and withdrawal of approvals, while directing further consideration of the financial penalties.
• Upper Tribunal (Tax and Chancery Chamber): In [2025] UKUT 00087 (TCC), the Tribunal explained the disgorgement methodology and remitted the calculation to the Authority.
• Upper Tribunal (Tax and Chancery Chamber): In the present decision, the Tribunal approved the Authority’s recalculations and directed the issue of final notices.