TPR success in Box Clever case
TV rental business, Box Clever, was created as a joint venture between Granada (now ITV) and Thorn (now Carmelite).
The Box Clever business was later sold and administrative receivers were subsequently appointed over Box Clever companies.
The Pensions Regulator (“TPR”) issued Financial Support Directives (“FSDs”) against five ITV companies in relation to the Box Clever defined benefit pension scheme. ITV referred the determinations to the Upper Tribunal.
The Tribunal decided in favour of TPR. It held that the appointment of administrative receivers did not break the chain of control between ITV and Box Clever and, therefore, the ITV companies fell within the scope of the FSD regime.
The Tribunal rejected ITV’s argument that TPR could not take into account events that occurred before the FSD legislation (the Pensions Act 2004) came into force in assessing whether it would be reasonable to issue an FSD. The Tribunal adopted a purposive interpretation of the legislation, noting that the purpose of the legislation is to create a “rescue framework” for pension schemes in deficit and that the objectives could not be met if TPR could not take into account events that occurred prior to the legislation coming into force.
The Tribunal also held that moral hazard was not a requirement for an FSD and that there was an “important distinction between blame and responsibility”.
This is the first time that an anti-avoidance matter has been considered by the Upper Tribunal at a substantive hearing.
The decision clarifies that FSDs can be based on events taking place before the legislation came into effect, going back an indefinite period of time. However, given the amount of time that has already passed since the legislation came into effect, this point is unlikely to be relevant in many cases.
The case also suggests that the legislation may be given a purposive interpretation, which could make it harder for other challenges in the future to succeed.
ITV has been granted permission to appeal. The dispute is likely to rumble on.