Appeal Court treats UURBS as tax avoidance scheme

In AD Bly Groundworks and Civil Engineering Ltd v HMRC [2025] EWCA Civ 1443, the Court of Appeal has upheld the decision of the Upper Tribunal that a company’s liabilities representing its promise to provide future pension benefits to key employees via an UURBS were incurred for the purpose of a tax avoidance scheme rather than expenses incurred wholly and exclusively for the purposes of the company’s trade, so that those liabilities were not deductible from the company’s profits for corporation tax purposes. The company’s evidence that the UURBS was primarily set up for the provision of pensions was rejected as being largely a product of their accountants, and the Court of Appeal confirmed that the factual finding that the UURBS was adopted as a tax saving scheme, with the provision of pensions being at best an incidental aim, was fatal to the company’s case.

Although not necessary for its decision, the Court dismissed HMRC’s alternative argument that the deduction should be disallowed as being in respect of “employee benefit contributions” under s.1290 of the Corporation Tax Act 2009.  

A transcript of the judgment can be found here.