Thorpe v HM Revenue & Customs

Thorpe v HM Revenue & Customs

The rule in Saunders v Vautier did not entitle the appellant to withdraw the fund as he was not absolutely entitled to the whole beneficial interest due to the possibility of other beneficiaries. The rule in Re Hastings-Bass did not apply as the payments were not trustee decisions but acts of the beneficiary. The appellant was liable to tax under s 591C as administrator, but not under s 596A as individual, provided the fund was returned to the scheme. There was no impermissible double taxation.

Parties
Appellant: Harry Thorpe; Respondents: Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
England and Wales
Judgment Date
26 March 2009
Procedural Posture
Appeal / Judgment After Appeal From Special Commissioner
Outcome
Appeal dismissed in respect of s 591C assessments; appeal allowed in respect of s 596A assessments, subject to return of funds to scheme.
Legal Topics
Pension Scheme Approval, Taxation of Unauthorised Pension Payments, Application of Saunders V Vautier, Application of Re Hastings Bass, Double Taxation, Human Rights (first Protocol)
Tax Law Trusts Law Pensions Law Pension Scheme Approval Taxation of Unauthorised Pension Payments Application of Saunders V Vautier Application of Re Hastings Bass Double Taxation +1 more

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Parties

Harry Thorpe

Appellant

Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

Appeal / Judgment After Appeal From Special Commissioner

Legal Issues

  1. 1 Whether the rule in Saunders v Vautier entitled the appellant to withdraw the pension fund without adverse tax consequences
  2. 2 Whether the rule in Re Hastings-Bass allowed reconstitution of the fund to avoid tax liability
  3. 3 Whether the combined effect of ss 591C and 596A ICTA resulted in impermissible double taxation contrary to principle and the Human Rights Convention

Ratio Decidendi

The rule in Saunders v Vautier did not entitle the appellant to withdraw the fund as he was not absolutely entitled to the whole beneficial interest due to the possibility of other beneficiaries. The rule in Re Hastings-Bass did not apply as the payments were not trustee decisions but acts of the beneficiary. The appellant was liable to tax under s 591C as administrator, but not under s 596A as individual, provided the fund was returned to the scheme. There was no impermissible double taxation.

Court Disposition

Appeal dismissed in respect of s 591C assessments; appeal allowed in respect of s 596A assessments, subject to return of funds to scheme.

Orders

  • Assessments under s 591C ICTA upheld and not discharged.
  • Assessments under s 596A ICTA discharged, subject to satisfaction that the fund is returned to the trustees.