It is worth noting that the judges were not in complete agreement on this point; two would have argued that it is only necessary for each element to be a ‘contributory part’ of an overall scheme. However, it is still reassuring that the majority argued for a limit on the scope of this definition.
When looking at the transfer in isolation, the previous rulings showed some general agreement that Mrs Staveley’s sons had had a benefit conferred on them.
They were in a materially better position, as the death benefits from the personal pension were not subject to IHT as the benefits from the section 32 policy (via the will) would have been.
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’.
