Nilebond Limited v The Commissioners for HMRC

Decision date: 19 December 2022

Neutral citation: [2023] UKFTT 14 (TC)

Overall AI summary confidence: high

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Short overview

This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.

AI confidence in this short overview: high

This appeal concerned a scheme sanction charge imposed after Nilebond’s pension scheme made a £37,500 loan to its corporate sponsoring employer, secured by a floating charge that was not registered at Companies House within the statutory period. The Tribunal held that where the borrower is a company a loan is only an "authorised employer loan" if the related charge is registered in accordance with the Companies Act (or any court-extended period) while the loan is extant, and that retrospective registration after repayment did not cure the defect. Nilebond’s appeal was dismissed and the £15,000 scheme sanction charge upheld.

Ratio decidendi

This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.

AI confidence in this ratio decidendi summary: high

For a corporate sponsoring employer, a pension-scheme loan is not "secured by a charge" for the purposes of the authorised employer loan rules unless the charge has been registered at Companies House within the statutory period (or any period extended by court order) while the loan remains outstanding; late registration effected after repayment cannot retrospectively render an earlier unregistered charge effective to avoid a scheme sanction charge.

Obiter dicta

This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.

AI confidence in this obiter dicta summary: medium

The judgment records that the statutory purpose of the authorised employer loan provisions is to protect tax-relieved pension funds by ensuring adequate security, and observes that an unregistered charge is, by statutory consequence, void as against a liquidator, administrator or creditor and therefore cannot satisfy a requirement that it "takes priority over any other charge."

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