In Gareth Clark [2018] UKUT 0397, the Upper Tribunal (UT) held that a transfer from a pension scheme came within the scope of an unauthorised payment. Some other procedural matters were addressed.

  • The taxpayer retired in 2000. He later became concerned with the poor returns from the pension scheme. To get better returns, he set up a series of 21 steps. These involved some new entities being formed. Some were based in the British Virgin Islands and Cyprus.
  • HMRC regarded one of these steps as an unauthorised payment from a pension fund. At the time, this could trigger an income tax liability of 40% or 55%.
  • The taxpayer appealed to the First Tier Tribunal (FTT) on the grounds that the transfer was not a 'payment' within the meaning of the Finance Act 2004 s.160-161.
  • The FTT held, and the unit trust agreed, that the word 'payment' has different meanings in different contexts. In this case, the transfer came within the definition.


This was a long case report involving fine points of law and a semantic analysis of word meanings.

The number of steps and the nature of some of them, complied with the hallmarks of a tax avoidance scheme as set out in DOTAS regulations.

Gareth Clark [2018] UKUT 0397