The case concerns directors’ entitlement to draw a pension on early retirement. The taxpayer retired as an executive director (and acting managing director) of the company aged 53, and drew a pension. The Revenue argued that because the taxpayer remained a director of the company thereafter (albeit an unremunerated non-executive director) then he could not have ‘retired’, and accordingly the Revenue assessed the pension payents to tax under s.600 ICTA 1988 as being unauthorised payments out of the pension fund.

Held: ‘retirement’ for pensions purposes meant the cessation of active, remunerated employment. The taxpayer had retired within the meaning of the pension trust deed and rules in this case.

Obiter: following Hillsdown Holdings v. IRC (1999), even if the payments had been unauthorised, if the recipient had been an actual or constructive trustee and had in fact been in a position to repay the monies to the pension fund, no charge to tax would have arisen under s.600.

Conrad McDonnell, instructed by Warner & Richardson, appeared on behalf of the Appellants