Partners and pensions

We act for a traditional partnership (the “Partnership”) that operates an unfunded and unapproved pension arrangement. Former equity partners (the “Pensioners”) are entitled to receive a pension paid directly from the Partnership under the terms of the partnership deed.

The Partnership does not deduct the pensions paid to the Pensioners. Instead the individual partners (the “Partners”) treat these as a charge and claim income tax relief on their personal tax returns.

The Partnership has received an offer from a company (the “Purchaser”) to sell its business and assets as a going concern. The Purchaser does not wish to assume any responsibility for the pension arrangement.

Under the terms of the proposed transaction the Partnership will remain responsible for its obligation in connection with the arrangement which according to the actuarial valuation is about £3m.

The Partnership is contemplating the commutation of the pension arrangement to facilitate...