In Gerrard Gordon, Gary Connell, Nicola Martino and Ian Hills v HMRC  TC06537 the FTT found that HMRC was too late to raise a discovery assessment for an unauthorised payment charge. Despite knowing that the taxpayers had used the discredited Wenns non-qualifying overseas pension scheme it delayed assessment for several years and the discovery became 'stale'.
- Discovery is the power that allows HMRC to reopen closed periods where they believe there is an underpayment of tax, by means of issuing an assessment.
- A Pensions Unauthorised Payment Charge arises when your pension funds are used for a non-pensions qualifying investment.
in this linked appeal, all taxpayers had all made transfers from their existing pension schemes into Wenns International Pension Scheme (“Wenns”) in 2009 and 2010.
- Wenns, it transpired was not a “qualifying recognised overseas pension scheme” (“QROPS”) and HMRC knew this by 2010.
- HMRC knew that the taxpayers had used the scheme.
- It assessed them for pensions unauthorised payment charges between the years 2012 and 2014.
- The taxpayers appealed against their assessments.
The FTT found that 2 to 3 years had elapsed between the time that HMRC had known that the Wenns scheme did not qualify as a pension scheme and the assessment of the taxpayers. Due to the delay in making the assessments there was no 'discovery' at the time of the assessment: the discovery assessments were invalid.
The concept of staleness continues to evolve, we have full details and case tracker on this topic in the Staleness section of our Discovery Assessments guide.
Useful guides on this topic
How to appeal a tax penalty
Essential reading in cases were there are penalties too
Discovery assessment and time limits
How far HMRC can go back, what conditions must be met for a valid discovery
Penalties: Error in a return or document
How work out penalties for different forms of inaccuracies
DOTAS: Disclosure of Tax Avoidance Schemes
Rules for declaring use of tax schemes