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M Danvers v CRC, Upper Tribunal (Tax and Chancery Chamber), 10 January 2017
Unauthorised payment to a pension scheme member
The taxpayer invested in a self-invested pension plan (SIPP)which bought cumulative preference shares in KJK Investments. KJK made loans to a third party company G Loans Ltd which made a loan to the taxpayer. It was a condition of making the loan that the SIPP invest all its assets in the KJK shares.
HMRC amended the taxpayer’s return on the basis that the loan was an unauthorised payment from a pension scheme under FA 2004 s 161.
The First-tier Tribunal dismissed the taxpayer’s appeal. It concluded there was never any realistic likelihood that the transfer of the taxpayer’s pension fund to the SIPP would not result in the funds being invested in the KJK shares and the taxpayer receiving the loan. The loan from G Loans was connected with the SIPP investment in KJK and was therefore an unauthorised payment.
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