In Gareth Clark [2018] UKUT 0397, the upper tribunal 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 at 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 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 on the grounds that the transfer was not a “payment” within the meaning of Finance Act 2004 ss160-161.
  • The first tier tribunal 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

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