“The payment of contributions shall be subject to such provisions as are set out in the Rules and the Terms and Conditions and such other requirements that the Scheme Administrator may specify from time to time.” (4) Rule 3(a) of the General Rules provides that a person who wishes to become a Member must complete an application procedure as required by the Scheme Administrator. That includes two declarations: (a) the Member agrees to be bound by the General Rules; and (b) the Scheme Administrator agrees to administer the SIPP as required by the General Rules. (5) Rule 3(b) of the General Rules provides that a person can become a Member only if, among other things, the Scheme Administrator agrees. (6) Rule 4 of the General Rules deals with contributions. Rule 4(g) provides, so far as relevant, that contributions made by the Member can only be paid in money or by a transfer of assets in specie in satisfaction of an obligation by the member to pay a monetary amount by way of contribution. (7) The Terms and Conditions set out the terms of the contract between Sippchoice, as the Scheme Administrator, and the member under which Sippchoice administers the SIPP. Both parties referred to and relied on the Terms and Conditions and the Application Form as well as the Contribution Form described at (12) below. (8) Clause 2(c) of the Terms and Conditions provides that Sippchoice has the right to decline any application for membership of the SIPP without giving reasons. (9) Clause 3(a) of the Terms and Conditions states that contributions to the SIPP may be made only in such manner as Sippchoice prescribes from time to time. Clause 3(e) provides that Sippchoice has the right to refuse to accept further contributions to the SIPP without giving reasons. (10) Clause 25 of the Terms and Conditions contains some general conditions, including: “(a) Except in the case of contributions of shares acquired through a savings related share option scheme, an approved profit-sharing scheme or an employee share ownership plan made in accordance with the Rules, or as otherwise agreed by us, all contributions to and payments from the [SIPP] are payable in sterling … unless otherwise specified in the Terms and Conditions.” (11) There was no document before the FTT communicating Sippchoice’s acceptance of Mr Carlton’s Application Form but the FTT inferred at [13], and it was common ground, that Sippchoice did accept it. That acceptance must have occurred on or before 16 March as is clear from the letter of that date, discussed at (13) below, which shows Mr Carlton’s membership number. From the date of acceptance of Mr Carlton’s membership application, both Mr Carlton and Sippchoice came under various contractual obligations set out in the Terms and Conditions. 3 (12) On the same date as he completed the Application Form, ie9 March 2016 , Mr Carlton completed a document headed ‘Sippchoice Bespoke SIPP Contribution Form’ (‘the Contribution Form’). At section D of this form, which was headed ‘In-specie Contributions’ and preceded by the words ‘PLEASE COMPLETE THE FOLLOWING SECTION ONLY IF YOU WISH TO MAKE AN IN-SPECIE CONTRIBUTION’, was written the following: Declaration to Sippchoice Limited I propose to make a net contribution to the Sippchoice Bespoke SIPP and this notification constitutes an irrevocable and binding obligation to make this contribution. Proposed net contribution£68,324 (net) Agreement I understand that by signing this declaration I am creating a legally binding and irrevocable obligation to make the specified contribution and that it will not be possible to change my mind even if, for whatever reason, I am unable to proceed with the asset transfer that was originally envisaged. Signature [Mr Carlton signed here] Date 9.03.16 (13) On 16 March, Sippchoice wrote to Mr Carlton as follows: “I confirm receipt of your Contribution Form dated9 March 2016 notifying us of your intent to make an in-specie contribution to the [SIPP]. By signing the declaration you created a legally binding and irrevocable obligation to make the contribution and as such we now require written confirmation from you of how you intend to settle the debt.” (14) On 24 March, Mr Carlton replied to Sippchoice: “Further to my Contribution Form dated9th March 2016 I can confirm that this contribution shall be made by way of an in-specie transfer of the following assets to satisfy the obligation: - HFM Columbus Group Holdings Limited Ordinary Shares: 760,846 units The contribution being made will be the value of the assets mentioned above. I understand that the value may change and that there are rules that must be adhered to with regards to a change in value. I agree that if the value decreases, I will pay a monetary amount into the scheme to bring the contribution up to the value quoted in my first letter. I understand that you, in your role as scheme administrator, are legally bound to pursue this payment from me. ....” (15) On 29 March, Sippchoice wrote to Mr Carlton confirming that “we are happy to accept the in-specie contribution of [the shares]” and asking him to arrange for the necessary stock transfer forms to be completed. It appears from another letter dated 29 March from Sippchoice to Mr Carlton that the stock transfer forms were executed on the 4 same day. In the second letter, Sippchoice informed Mr Carlton that the valuation report of31 December 2015 showed that the shares had a value of£68,323.97 . That was lower than the amount of£68,324 indicated on the Contribution Form. In the letter, Sippchoice stated that: “As a result, we require you to contribute additional funds to the value of£0.03 to settle the debt of£68,324 that has been created.”
“188 Relief for contributions (1) An individual who is an active member of a registered pension scheme is entitled to relief under this section in respect of relievable pension contributions paid during a tax year if the individual is a relevant UK individual for that year. (2) In this Part “relievable pension contributions”, in relation to an individual and a pension scheme, means contributions by or on behalf of the individual under the pension scheme other than contributions to which subsection (3) or (3A) applies. ... (8) The following sections make further provision about relief under this section – ... section 195 (transfer of certain shares to be treated as payment of contribution).”
“192 Relief at source (1) Where an individual is entitled to be given relief in accordance with this section in respect of the payment of a contribution under a pension scheme, the individual or other person by whom the contribution is paid is entitled, on making the payment, to deduct and retain out of it a sum equal to income tax on the contribution at the [basic rate]. … (2) If a sum is deducted from the payment of the contribution— (a) the scheme administrator must allow the deduction on receipt of the residue, 5 (b) the individual or other person is acquitted and discharged of so much money as is represented by the deduction as if the sum had actually been paid, and (c) the sum deducted is to be treated as income tax paid by the scheme administrator. (3) When the payment of the contribution is received— (a) the scheme administrator is entitled to recover from the Board of Inland Revenue the amount which is treated as income tax paid by the scheme administrator in relation to the contribution, and (b) any amount so recovered is to be treated for the purposes of the Tax Acts in the same manner as the payment of the contribution …”
“195 Transfer of certain shares to be treated as payment of contribution (1) For the purposes of sections 188 to 194 (relief for contributions) references to contributions paid by an individual include contributions made in the form of the transfer by the individual of eligible shares in a company within the permitted period. (2) For the purposes of those sections the amount of a contribution made by way of a transfer of shares is the market value of the shares at the date of the transfer. (3) ‘Eligible shares’, in relation to a contribution made by an individual, means shares— (a) which the individual has exercised a right to acquire in accordance with the provisions of an SAYE option scheme, or (b) which have been appropriated to the individual in accordance with the provisions of a share incentive plan. (4) ‘The permitted period’ — (a) in relation to shares which the individual has exercised a right to acquire in accordance with the provisions of an SAYE option scheme, is the period of 90 days following the exercise of that right, and (b) in relation to shares which have been appropriated to the individual in accordance with the provisions of a share incentive plan, is the period of 90 days following the date when the individual directed the trustees of the share incentive plan to transfer the ownership of the shares to the individual. (5) In this section— ‘SAYE option scheme’ has the same meaning as in the SAYE code (see section 516 of ITEPA 2003 (SAYE option schemes)), and ‘share incentive plan’ has the same meaning as in the SIP code (see section 488 of ITEPA 2003 (share incentive plans)).”
“The meaning of an ordinary word in the English language is not a question of law. The proper construction of a statute is a question of law if the context shows that a word is used in an unusual sense; the court will determine in other words what that unusual sense is. It is for the tribunal which decides the case to consider, not as law but as fact, whether in the whole circumstances the words of the statute do or do not as a matter of ordinary usage of the English language cover or apply to the facts which have been proved. If it is alleged that the tribunal has reached a wrong decision then there can be a question of law but only of a limited character. The question would normally be whether their decision was unreasonable in the sense that no tribunal acquainted with the ordinary use of language could reasonably reach that decision.”
“[24] The modern approach to statutory construction is to have regard to the purpose of a particular provision and interpret its language, so far as possible, in a way which best gives effect to that purpose. This approach applies as much to a taxing statute as any other: see IRC v McGuckian[1997] STC 908 at 915,[1997] 1 WLR 991 at 999; Barclays Mercantile Business Finance Ltd v Mawson (Inspector of Taxes)[2004] UKHL 51 at [28],[2005] STC 1 at [28],[2005] 1 AC 684 . In seeking the purpose of a statutory provision, the interpreter is not confined to a literal interpretation of the words, but must have regard to the context and scheme of the relevant Act as a whole: see WT Ramsay Ltd v IRC, Eilbeck (Inspector of Taxes) v Rawling[1981] STC 174 at 179–180,[1982] AC 300 at 323; Barclays Mercantile Business Finance Ltd v Mawson (Inspector of Taxes),[2005] STC 1 at [29],[2005] 1 AC 684 at [29]. The essence of this approach is to give the statutory provision a purposive construction in order to determine the nature of the transaction to which it was intended to apply and then to decide whether the actual transaction (which might involve considering the overall effect of a number of elements intended to operate together) answered to the statutory description. Of course this does not mean that the courts have to put their reasoning into the straitjacket of first construing the statute in the abstract and then looking at the facts. It might be more convenient to analyse the facts and then ask whether they satisfy the 7 requirements of the statute. But however one approaches the matter, the question is always whether the relevant provision of statute, upon its true construction, applies to the facts as found: see Barclays Mercantile Business Finance Ltd v Mawson at [32].”
“[38] In common with the Special Commissioners and Blackburne J, I am of the view that - subject always to a consideration of the particular context in which it is used - the more natural meaning of the phrase ‘pays a sum’ is ‘pays a sum of money’. I was not persuaded by Mr Jones that it can as naturally refer, for example, to the transfer of a holding of shares. If A transfers to B 1,000 shares worth£1,750 , he is unlikely to describe himself as having ‘paid B£1,750 ’. He would say that he had sold, given or transferred (whatever the appropriate verb) 1,000 shares to B, perhaps (if relevant) adding their precise value (if known) or their approximate value. If he had owed B£1,750 and B had agreed to take the 1,000 shares in satisfaction of the debt then, to the question whether he had paid B the debt, he might legitimately say yes: only a pedant would reply that he had not actually paid the debt, but that B had agreed to accept a transfer of the shares in discharge of it. But that example does not assist the present argument, which is as to the meaning of a familiar English phrase as used in a section in an Act of Parliament. In my view, its more natural meaning is that it means ‘pays a sum of money’. [39] That, however, is not the end of the case since, as Mr Jones urged and Mr Goy rightly accepted, the context in which the phrase is used may compel the conclusion that Parliament intended it to have a wider meaning, including the transfer of non-cash assets. That may be because the context is sufficient to show that, to limit the meaning of the phrase to its more natural sense, would lead to an absurdity in the operation of the legislation; or because, viewed objectively, the context of the legislation points towards the conclusion that the wider meaning must have been intended. … [42] I am inclined, therefore, to consider that there probably is a sufficient context in s 19 to require a broader interpretation to be attached to the phrase ‘pays a sum’, although I would, without more, hesitate so to interpret s 19. When, however, attention is focused on s 595(1) in the context in which it appears in Pt XIV, I consider that there are further factors supporting this broader interpretation of ‘pays a sum’. I accept, first, that the inclusion in ss 599A, 600 and 601 of definitions extending the sense of ‘payment’ to include 9 ‘any transfer of assets or other transfer of money’s worth’ tells against that interpretation, there being no like expanding definition in s 595(1). But whilst that consideration cannot be ignored, I do not regard it as conclusive against the Revenue’s argument, any more than did the Special Commissioners and Blackburne J. The three provisions referred to are concerned with different considerations and cannot answer the question raised by s 595(1). … [45] These considerations have satisfied me that the overall context in which s 595(1) uses the phrase ‘pays a sum’ points away from the conclusion that it should be construed narrowly as meaning ‘pays a sum of money’. Mr Goy’s concessions as to the wider meaning of ‘sum paid’ in s 592(4) of ICTA and ins 76(3) of the Finance Act 1989 , the unlikelihood of ‘payment’ in s 596(3)(b)(ii) bearing the narrow meaning of ‘payment of a sum of money’ and the practical difficulties of Mr Goy’s interpretation for the operation of s 596A(8) have collectively satisfied me that, objectively interpreted in its proper context, the phrase ‘pays a sum’ in s 595(1) includes not just the payment of money but also the transfer of non-cash assets. It appears to me that the suggested distinction between these two funding methods is one that in practice makes no commercial sense and cannot reflect any legislative policy intended to underlie s 595(1). [46] More generally, whether the scheme is funded by cash payments or by non-cash assets, the funding will in both cases have to be recorded in the books of the employer and of the trustees by reference to a particular monetary figure; and the substance of the matter will be that the scheme will have been funded by assets of that value, whatever their nature. If cash has been paid, it might well the next day be invested in shares; and if shares have been transferred, they might well the next day be converted into cash. The form of the funding can make no rational difference to the taxing policy underlying s 595(1). Further, if the distinction is in fact relevant, there could in some cases be a real uncertainty as to the side of the line on which the method of funding lay. In most cases the contribution proposed to be made by the employer for a particular year will be the subject of prior agreement with the scheme trustees. If, for example, an employer agrees to pay£100,000 and later agrees with the trustees that he will satisfy that commitment by transferring£100,000 worth of shares, will he be regarded as having ‘paid’£100,000 pursuant to his commitment? Or will he be regarded as having simply made a transfer of non-cash assets? Whatever the answer, why should Parliament be interpreted as having intended such an inquiry to be embarked upon? What possible difference can it or should it be regarded as making?”
“‘Payment’ includes a transfer of assets and any other transfer of money’s worth”
“Giving effect to cash contributions As explained above, contributions to a registered pension scheme must be a monetary amount. However, it is possible for a member to agree to pay a monetary contribution and then to give effect to the cash contribution by way of a transfer of an asset or assets.”
“… it may be possible to structure a transaction so that a monetary contribution is achieved without the need for cash to pass between the employer and the pension scheme.”