Pension trustee decision making: fishing for a solution? - .PDF file.
On 9 May 2013, the Supreme Court gave judgment in the cases of Futter and another v HMRC and Pitt and another v HMRC. These cases are very similar and deal with decision making by pension trustees.
Historically, trustees have sometimes used what is known as the Rule in Hastings Bass to allow them to unwind decisions where, for example, a drafting mistake in trust documentation is discovered, without the need to resort to the costly and time-consuming process of rectification.
Essentially, what the Rule has been interpreted to mean is that if trustees do not take into account all relevant factors, or do take into account irrelevant factors, when making a decision, and the effect of that decision is different than they intended, then that decision can be treated as if it had not been made. The scope of the Rule has been narrowed by the Supreme Court’s judgment.
The main area where this Rule has been used is where trustees have made decisions which have then had unforeseen tax consequences. HMRC felt that the Rule was being stretched too far and therefore commenced consolidated proceedings in these two cases…
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