The Upper Tribunal has supported The Pensions Regulator’s former use of its anti-avoidance powers against ITV regarding its Box Clever scheme.

The Box Clever pension scheme was formed in 2000 as part of a merger between ITV (then Granada) and Carmelite. Employees were transferred to the new company and enrolled into the new pension scheme. Following the scheme’s collapse TPR opened an anti-avoidance investigation, as ITV extracted “significant value from the joint venture”, the regulator explained.

Now, the tribunal has confirmed its support of TPR’s use of its powers, noting that it is reasonable to require ITV to provide financial support for the scheme in this case. The Upper Tribunal’s judgement was published today, 18 May 2018, and follows a two-week hearing in January this year on the case – the first anti-avoidance case by TPR to be heard by the tribunal.

The judges ruled in favour of TPR’s use of its Financial Support Direction power against ITV to support the pension scheme that comprises of 2,800 members and a deficit of c.£115m.

The judges stated: “By their choice of structure for the Joint Venture, the shareholders extracted considerable cash from the business with no risk of recourse to their assets. They retained an ongoing interest in the merged business with the possibility of further value being generated if the business was successful, but without having to bear any responsibility if the business, whose strategy they continued to determine, subsequently failed.”

TPR director of case management Mike Birch, said: "We are very pleased with this ruling which sends a clear message to companies linked with defined benefit pension schemes that we will not hesitate to use our anti-avoidance powers where we believe it is reasonable for them to provide financial support. We will pursue these cases for as long as necessary to protect pension savers and the Pension Protection Fund.

“This has been a long and complex case, where the targets have raised numerous legal challenges causing significant delays in an outcome being reached. We now hope that ITV will accept the Upper Tribunal’s findings and seek to work with TPR to put in place appropriate financial support for the scheme and deliver a good outcome for members.”

ITV has 14 days to seek permission to appeal the tribunal’s decision. If ITV does not do this, TPR’s determinations panel will issue financial support directions to the company.

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