In Mark Danvers v HMRC [2016] UKUT 0569 the Upper Tribunal (UT) upheld the earlier decision of the First Tier Tribunal (FTT) that a third party loan to a pension scheme member was an unauthorised payment.

pensions unauthorised payment charges can arise if an ‘unauthorised payment’ is made to a pension scheme member. This includes payments and benefits made in connection with an investment acquired using pension scheme funds.

  • The taxpayer invested funds in a SIPP, which used them to buy preference shares in KJK Investments Ltd (‘KJK’)
  • KJK made loans to a third party company G Loans Ltd (‘G ’).
  • G made loans to the taxpayer.
  • It was a condition of making the loan that the SIPP invest all its funds in KJK.
  • The taxpayer could not disinvest in KJK or transfer money out of the SIPP without written permission.

The FTT found that the loan from G Loans was connected with the investment in KJK by the SIPP, and was therefore an unauthorised payment.

The UT upheld this decision.


It is tempting to find ways to access pensions savings early, and it is possible to accidently create a charge. See further details in our subscriber guide: Pensions: unauthorised payment charges.


Case reference: Mark Danvers v HMRC [2016] UKUT 0569