HMRC V Thorpe [2009] EWHC 611 (Ch)

Key Point

  • The Rule in Saunders v Vautier can only apply where the instant beneficiaries are entitled to the whole of the beneficial interest across all points in time; if more beneficiaries may arise, no matter how remote the possibility, the rule cannot be applied.


  • T and his wife were the beneficiaries of a pension scheme for the employees of a company of which only T and his wife were employees
  • T was also a trustee of the pension scheme
  • Under the rules of the pension scheme, the members were entitled to the pension upon retirement, or if they died while in employment, their widow or dependant would be entitled to the pension
  • T’s wife died, leaving him sole member of a pension scheme.
  • T withdrew the funds from the pension scheme on the basis that he was the sole beneficiary and was entitled to do so under the rule in Saunders v Vautier
  • The HMRC withdrew approval of the pension scheme, and assessed T as liable for tax for the unauthorised withdrawal


  • Was T entitled to withdraw the funds under the rule in Saunders v Vautier?

Held (Chancery Division, High Court)

  • T was not entitled to withdraw the funds under the rule in Saunders v Vautier as there were the possibility of additional beneficiaries in the future

Sir Edward Evans-Lombe

  • He cited judgment of the special commissioner: at [14] ‘46. The Appellant accepted that there was a theoretical possibility that he might remarry or that he might have dependents within the meaning of the rules of the Scheme. However, he argued that there was no practical possibility of any appointment being made in favour of such a person because any pension that he might take would exhaust the trust fund. In my judgement, that is not sufficient. There remained the possibility that persons other than the Appellant might be entitled to an interest under the trusts of the Scheme. In the circumstances, the Appellant was not entitled to the whole beneficial interest and, accordingly, was not entitled to call for a transfer of the trust property under the rule in Saunders v. Vautier.’
Beneficiary's Interest
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