UT (Tax & Chancery) UT/2023/000103 - [2025] UKUT 00102 (TCC)

Grounds 7 and 8 are that the Tribunal erred in law in refusing MLT relief from the scheme sanction charge under s 268. Because MLT did not succeed before the FTT on either of the time limit arguments (which were appealed as Grounds 5 and 6), MLT’s applications to be relieved from liability for the scheme sanction charges relating to Formwise, Langford and Prisym were out of time. As a result, the FTT only considered whether MLT met the s 268 requirements in relation to the unauthorised payments made by Ballards, Criticall and Gannon.

Section 268 was set out in full under Ground 5; subsection (7) provides that an administrator may apply to be discharged from a scheme sanction charge if it:

“(a)

…reasonably believed that the unauthorised payment was not a scheme chargeable payment, and

(b)

in all the circumstances of the case, it would not be just and reasonable for the scheme administrator to be liable to the scheme sanction charge in respect of the unauthorised payment.”

To succeed in obtaining a discharge, an administrator must therefore meet both parts (a) and (b) of subsection (7). The FTT found that MLT met neither. This Ground concerns part (a), and Ground 8 relates to part (b). Ground 7 was that the “the only conclusion available to the Tribunal was that the trustees had a reasonable belief that there were no unauthorised payments”.