Pensions  

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
CPD
Approx.30min

HMRC was essentially arguing that the sons had had a benefit conferred on them if you compared the position at the personal pension with this ‘moment’ between transfers when they had nothing, rather than comparing the two pensions. 

This seems remarkably similar to the idea that someone can deprive their estate during a pension transfer by comparing the estate’s value under the new pension with the ‘moment’ between transfers when the benefits return to it, rather than looking at the estate’s value under each of the two pensions.

In relation to conferring benefits, the Court dismissed the return to zero approach as a ‘wholly artificial analysis’ which ‘ignores the reality’ of how pension transfers work.

If this rejection of the return to zero approach can be applied more widely, it seems to follow that in a transfer between two schemes where the administrator has discretion over death benefits, the estate could not be said to lose value, as there is no moment during which the benefits return to it.

This could mean that it is only possible to argue that there has been a disposition at all where the original pension would have paid death benefits to the estate. 

It will be fascinating to see whether HMRC amends its guidance following this judgment, and whether any further cases emerge using these rulings as a precedent.

Jessica List is pension technical manager at Curtis Banks

CPD
Approx.30min

Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

  1. Mrs Staveley’s sons would have received death benefits from the section 32 policy via her will had the transfer not taken place, true or false?

  2. Why did HMRC say that Mrs Staveley had created two ‘transfers of value’ for inheritance tax purposes?

  3. Deciding when to access a pension now falls firmly within the realms of planning, and a decision to delay should not be seen as IHT avoidance, true or false?

  4. 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, true or false?

  5. In relation to conferring benefits, the Court dismissed the return to zero approach, true or false?

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

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

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