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Taxation of pension trustee's sub underwriting commissions

United Kingdom
28/02/2000
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The Court of Appeal has allowed the appeal of the Trustees of the British Telecom Pension Scheme against Lightman J's decision that the Inland Revenue were entitled to tax sub underwriting commissions earned by trustees of approved pension schemes.

In overturning the decision of the Special Commissioners of the Inland Revenue, Lightman J had found that sub underwriting by the trustees amounted to trading activity and therefore did not come within the Trustees' exemption from tax on investment income.

The Court of Appeal held that the Lightman J did not have jurisdiction to review the Special Commissioners' decision that the sub underwriting was not trading as it was a decision of fact. Although the Court of Appeal suggested that it did not agree with the Special Commissioners' finding, it was obliged to reinstate it.

Whilst coming as a relief to the BT trustees, this decision does not resolve the issue itself. There would appear to be nothing to stop the Inland Revenue from attempting to tax another pension scheme in the future.

For further information on pensions issues, please contact Mark Atkinson on Tel: 0171 367 2184 or e-mail [email protected].

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