Taxable deed

In July 1998 the husband the managing director of the family company agreed to leave the company two years before his retirement date to work at home as a consultant. It was agreed with the other company directors that his remuneration benefits and pension were to remain the same. In March 1999 because of a pension scheme deficit the company said that its spouse's death in service pension benefit was to cease.

The husband was diagnosed with cancer and received a reserved benefit statement showing that if he died before retiring his widow would receive a pension of £120 000 a year and if he died afterwards she would receive £40 000 a year. He subsequently died before his retirement date and his wife received a death in service benefit of £363 708 and a pension of £12 268 a year....