In Gareth Clark v HMRC [2020] EWCA Civ 204, the Court of Appeal (CoA) upheld the decisions in the two earlier appeals. It held that a transfer from an authorised pension scheme into another fund in order to enable pension cash to be invested in residential property amounted to an unauthorised payment.

  • The taxpayer arranged a scheme to extract £2.115 million in funds from his Self Invested Personal Pension (SIPP) so as to access funds by loans and investment management.
  • HMRC raised a Discovery Assessment on the basis that the transfer was not into a registered pension scheme.
  • A 40% pensions Unauthorised Payment Charge was due on the funds transferred. No tax was due as a result of the initial issue.
  • HMRC subsequently found that a different transfer was, in fact, an unauthorised payment. The amount of tax due was the same, by coincidence as that assessed the first instance. HMRC did not raise a new assessment for the ensuing unauthorised payment charge.
  • The taxpayer appealed against the assessment.

The taxpayer's appeal to the First Tier Tribunal (FTT) was unsuccessful, it found that the conditions for discovery were met and that the transfer of funds amounted to an unauthorised payment.

The taxpayer's appeal to the Upper Tribunal (UT) also failed. The UT agreed with the FTT on both points.

On appeal to the CoA, it was concluded that the transfer from the SIPP was by 'a bizarre series of transactions' designed to make it appear if there was a transfer from an authorised pension scheme to another. It was confirmed that the transfer from the SIPP amounted an unauthorised payment.

The appeal was dismissed.

Useful topical guides and links

Unauthorised payment charge
Pensions and investments: how, when and why a charge arises.

How to appeal a decision of HMRC
Key steps in appealing a decision of HMRC.

How to appeal a tax penalty
Essential reading in cases where there are penalties.

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.

External links

Gareth Clark v HMRC [2020] EWCA Civ 204




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