Taxman receives £200m blow as pension funds win court battle

Pension funds sub-underwrite by guaranteeing they will buy shares when companies have rights issues in return for a commission.

The court’s decision yesterday, which overturned a previous High Court decision, could save pension funds £200m a year.

The British Telecommunications and Post Office pension schemes argued that sub-underwriting was an integral part of their investing activities, and therefore exempt from tax.

Lawyers representing the Inland Revenue, however, had argued that sub-underwriting constituted a trade and commissions earned were therefore subject to tax.

The Court refused the Revenue leave to appeal, although it could petition the House of Lords over the issue.

High Court judgment deals blow to pensions

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