Unauthorised payments from pension scheme to company

In 2010 the taxpayer set up a company after the failure of a construction business he had carried on with his brother. Later the company began to suffer cash flow problems.

The taxpayer already had a pension funds worth about £200 000 and after taking advice from an online pension business PPC June 2011 he established a new registered pension scheme. A few days later PPC registered the arrangement with HMRC. The funds from the taxpayer’s previous schemes were transferred to the new one. PPC was the scheme practitioner and the taxpayer was the trustee and sole member. The company was the sponsoring employer and scheme administrator.

The scheme made loans totalling £80 000 to the company in three tranches. Loan 1 was designed to meet the requirements to be treated as an ‘authorised employer loan’ under FA 2004 s 179. But these...