Jurisdiction(s):
United Kingdom

Upper Tribunal clarifies objective ‘commercial context’ test; upholds plain wording despite absurdity; partial remittal; confirms FA 2004 s268 six-year limit and ‘reasonable belief’ standard in SSAS unauthorised payment appeals

Published on: 15 May 2025

Published by a LexisNexis Pensions expert

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Article summary

Morgan Lloyd Trustees Ltd v Revenue and Customs Commissioners [2025] UKUT 00102 (TCC) What are the practical implications of this case?

This appeal underlines that, notwithstanding a legal error identified by the UT—here, the FTT’s misdirection about the proper test for identifying the contract’s ‘commercial context’—the UT retains a choice as to whether the decision should be overturned. Against that backdrop, the UT’s treatment of how the relevant agreements ought to be construed, and its assessment of the findings of fact made by the FTT (valuation material included), is noteworthy. Accordingly, the UT focused on the words actually used and on the FTT’s recorded findings, rather than substituting a broader commercial gloss. That emphasis shaped the result reached in Formwise in practice. In relation to Formwise, despite the FTT’s decision being tainted by an error of law, the UT determined that the parties were to be held to the clear language of their bargain, even though that seemed to yield an absurd outcome, rather than resorting to a commercially sensible reading that would have effectively excused the parties from their own want of care as to the identity of the asset actually comprised in the transaction...

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