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

We first considered whether the FTT had approached its task in the right way. At [191] the FTT held that the reasonable pension fund trustee in the position of MLT would have relied on expert valuers only if they had:

“(1)

undertaken some steps to ensure that those on who they relied have the relevant expertise and

(2)

even if they did so, to scrutinise the transactions in which they are involved to fulfil their role as trustee of the pension fund and to at least apply basic commercial acumen to test the valuations which are being provided.”

The FTT clarified at [194] that the second of those points did not extend to engaging in the “technical analysis underlying the valuations”, but did require consideration “from a commercial perspective, whether the valuations made sense”, and adding that “no technical expertise is required for this”.

At [202] the FTT took into account that MLT was not only a pension fund trustee but also a professional pension fund provider, adding that although the reasonable person in that position can contract out its obligations as a trustee to a third party, that reasonable person would also have tested the information provided by that third party “by reference to critical analysis”.

At [203] the FTT set out how the reasonable corporate pension trustee who had contracted out valuation of assets to third parties would have acted, saying that reasonable trustee would have:

“1.

Applied a critical commercial and business view to the information provided to it from its professional valuers.

2.

Carefully considered the legal identity of the assets which were to be subject to the sale and leaseback.

3.

Given detailed scrutiny to the documents (and other related transactions) which formed the basis of the funding transaction to ensure that they reflected the transaction as it was intended to be implemented.

4.

Applied time and commercial acumen to considering the actual risks in the
transaction before signing it off.”

The FTT therefore identified the correct legal test, namely how a reasonable person in the position of MLT would have acted.