Where the revenue gave notice of its withdrawal of approval of a pension scheme under section 591B(1) of the Income and Corporation Taxes Act 1988, the date for the purposes of section 591C(1) when the charge to tax arose in respect of that scheme was the date when approval of the scheme was withdrawn and not the date from which approval ceased to continue.

The Court of Appeal, Civil Division, so held in a reserved judgment when dismissing an appeal by the John Mander Pension Scheme Trustees Ltd (“JMPST Ltd”) against the decision made by Vos J sitting in the Upper Tribunal (Tax and Chancery Chamber) on 28 January 2013 ([2013] UKUT 51 (TCC), dismissing its appeal against the dismissal by the First Tier Tribunal on 28 October 2011 of JMPST Ltd’s appeal against two assessments of £475,200 each, made by the Revenue and Customs Commissioners in respect of its pension scheme under section 591(C) of the Income and Corporation Taxes Act 1988. The appeals were dismissed on the grounds that the tax charged under the assessments arose in the 2000/2001, and not the 1996/1997 tax year.

JMPST Ltd was the sole trustee and administrator of the John Mander Ltd Director’s Pension Scheme. In April 2000 the revenue gave notice of withdrawal of approval of the scheme to the then trustees of the scheme, Louvre Trustees Ltd and TM, with effect from 5 November 1996, and stated that tax would be chargeable under section 591C of the 1988 Act at the rate of 40% on the value of the scheme assets. The revenue then issued an assessment in the sum of £475,200 to Louvre, who subsequently resigned. JMPST Ltd was then appointed as trustee. In 2007 the revenue issued an assessment to JMPST Ltd in the sum of £475,200 in respect of the same tax year as the earlier assessment 2000/2001. The First Tier Tribunal dismissed the appeals against the assessments ([2011] UKFTT 686 (TC); [2011] TC 01528). JMPST Ltd contended that the tax charged under the 2000 and 2007 assessments arose in the 1996/1997 and not the 2000/2001 tax year, and that it was not liable to pay the tax due under those assessments in its capacity as the present administrator of the scheme.

MOSES LJ said that the 1988 Act had previously made provision for certain pension schemes to be approved by the revenue and to benefit from tax advantages. Section 591B(1) conferred power on the revenue, if it was of the opinion that facts concerning an approved scheme or its administration ceased to warrant continuance of the approval, to “at any time by notice to the administrator, withdraw their approval on such grounds, and from such date (which shall not be earlier than the date when those facts first ceased to warrant the continuance of their approval…), as may be specified in the notice." It was required in the notice of withdrawal to specify a date from which approval ceased to run. Section 591C(1) of that Act, introduced by section 61 of the Finance Act 1991, imposed a tax charge where approval had ceased.

JMPST Ltd argued that under section 591B(1) of the 1988 Act the date when approval ceased to have effect was not the date when the approval of the scheme was withdrawn but the date specified in the notice of 5 November 1996, in the tax year 1996/1997. Neither of the assessments charged tax in that year and accordingly they were either invalid or if they had assessed the trustee to tax in that year, they were out of time.

His Lordship said that the tax was imposed under section 591C(1) of the 1988 Act where an approval of the scheme ceased to have effect. There was no further identification in section 591C(1) of the year in which the tax fell to be charged other than the indication that it should be charged where an approval of a scheme ceased to have effect. That subsection went no further because it had to cater for three different ways in which approval of a scheme ceased to have effect. Section 591D(7) of the 1988 Act 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)... and any reference in section 591C to the date of the cessation of the approval of the scheme shall be construed accordingly.” Those words made it clear that the date for the purposes of section 591C(1) of the 1988 Act when the charge to tax arose was the date when approval of the scheme was withdrawn and not the date specified in the notice from which approval ceased to continue. The charge therefore arose within the tax year 2000/2001 when approval was withdrawn under section 591B(1) of the 1988 Act.

PATTEN and BEATSON LJJ agreed.