Scheme sanction and unauthorised payment charges

In January 2008 Mr and Mrs W bought the taxpayer BFL a company that sold lighting products. The couple also owned FL. The BFL Pension Scheme (BFPS) was set up in March 2010. In the November BFPS loaned £200 000 to FL. The scheme lent £200 000 to BFL in March 2011 and a further £50 000 to FL in January 2012.

After an enquiry HMRC issued discovery assessments for unauthorised payment charges and unauthorised payment surcharges relating to the first loan to FL and the loan to BFL. It also issued a discovery assessment for a scheme sanction charge.

The taxpayer appealed. It said the discovery assessment was invalid because HMRC did not have the power to issue such an assessment in relation to a scheme sanction charge. The First-tier Tribunal agreed and set aside that assessment.

However on the unauthorised payment charge...