Taxation logo taxation mission text

Since 1927 the leading authority on tax law, practice and administration

Deductions for employee benefit contributions

04 January 2022
Issue: 4822 / Categories: Tax cases
AD Bly Groundworks and Civil Engineering Ltd; CHR Travel Ltd (TC8329)

The taxpayers set up unfunded unapproved retirement benefit schemes (UURBS) under which they would provide directors and key employees with a pension in the future. The pensions were calculated by reference to estimated profits for he relevant year and were set at between 80% and 100% of the profits before tax for each period. The taxpayers made provisions in their accounts for their liability to make future pension payments and claimed a deduction in calculating their profits. The same firm of chartered accountants had marketed the arrangement to both companies.

The UURBS was notified to HMRC under the disclosure of tax avoidance scheme legislation.

HMRC disallowed the deductions saying the liabilities were incurred for the purpose of a tax avoidance scheme and not wholly and exclusively to pay pensions to employees.

The First-tier Tribunal concluded that the provision of pensions to directors was ‘at best only an incidental aim’...

If you or your firm subscribes to, please click the login box below:

If you are not a subscriber but are a registered user or have a free trial, please enter your details in the following boxes:

Alternatively, you can register free of charge to read a limited amount of subscriber content per month.
Once you have registered, you will receive an email directing you back to read this item in full.

Please reach out to customer services at +44 (0) 330 161 1234 or '' for further assistance.

back to top icon