UT considers corporation tax treatment of UURBS

The UT has dismissed an appeal by taxpayer employers, who had made contractual arrangements relating to unfunded unapproved pension schemes (UURBS) in respect of certain employees and directors, and had therefore sought a corporation tax deduction for the associated accounting provision: AD Bly groundworks and Civil Engineering Ltd & anor v HMRC [2024] UKUT 104 (TCC) (22 April 2024). HMRC rejected the deduction on the basis that the relevant liabilities were not incurred wholly and exclusively for the purposes of the appellants’ trades. The FTT agreed with HMRC that the appellants’ primary purpose in entering into the arrangements was to reduce their liability to pay tax without incurring any actual expenditure. Subject to a point regarding the timing of the expenditure, the UT agreed with the FTT and dismissed the appeals. The UT also considered the meaning of “employee benefit contribution” for the purposes of the rules disallowing certain contributions in section 1290 of CTA09, and held that these rules would not have applied to disallow the deduction. To read the decision, click on this link.