The Staveley pensions case has posed interesting legal challenges

  • Describe some of the challenges around the Staveley cse
  • Describe HMRC's attitude to the case
  • identify why there was controversy

The focus, then, was on whether Mrs Staveley intended to confer this benefit. The Supreme Court, however, revisited the question of whether benefits had actually been conferred at all.

After all, the sons never had any actual rights to benefits under the section 32 policy, Mrs Staveley’s will, or under the personal pension.

Mrs Staveley could have changed her will or expression of wishes, or chosen to take benefits, at any time. Under the personal pension, the administrator might also not have chosen to pay in line with the expression of wishes.

The Court ruled that all that had actually changed with the transfer was who had control over the death benefits, from Mrs Staveley to the personal pension administrator.

As the transfer had not conferred any benefits, the Court said it would be ‘surprising’ to still conclude that the appellants had failed to show that Mrs Staveley had not intended to confer them. 

Speaking of who had control over the death benefits: the Supreme Court’s judgment also seems to indirectly (and perhaps unintentionally) question whether pension transfers would always be dispositions. 

The definition mentioned at the beginning of the article requires there to be a loss to the person’s estate.

The industry has always understood that HMRC’s view is that during a transfer, the right to decide where the death benefits go momentarily returns to the person’s estate.

If the person chooses to transfer to a scheme where the administrator has discretion, rather than one where the benefits go to the estate, that value has effectively been removed from the estate. Therefore this will be a disposition, which will be a transfer of value unless an exemption applies. 

However, the Supreme Court’s ruling explicitly states that the parties agree Mrs Staveley’s transfer is a disposition ‘because she no longer had the right to determine the destination of the death benefits’.

This is true for Mrs Staveley’s transfer because she moved from a scheme where the death benefits would go to her estate, to one where the administrator had discretion.

The statement seems to refer to the differences between the two pensions, rather than comparing the position at the new pension with a moment right before the transfer, when the funds were (according to the view outlined above) deemed to be momentarily returned to the estate. 

It’s possible that this is just semantics; however, later in the judgment the Supreme Court also rejects what it calls HMRC’s ‘return to zero’ approach.

The Court found that part of HMRC’s argument for Mrs Staveley having conferred a benefit on her sons relied on there being ‘a moment when rights under the section 32 policy have ended, but rights under the [personal pension] have not yet begun’.