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Asset valuations showed no basis of reality

20 April 2023
Issue: 4885 / Categories: Tax cases
Morgan Lloyd Trustees Ltd and others (TC8779)

Seven companies required finance but had exhausted all their usual sources. Their financial adviser suggested that they either borrow money from their pension schemes or sell assets to the schemes. While this can be permissible the assets sold or used to secure the borrowings must have real value this was not the case here.

After an enquiry HMRC concluded that the assets had been overvalued and raised assessments on the basis that unauthorised employer payments were made out of the company pension funds so an unauthorised payment charge arises under FA 2004 s 208 along with a surcharge is payable under s 209. In addition HMRC imposed a scheme sanctions charge (FA 2004 s 239) on the financial adviser.

The taxpayers appealed.

The First-tier Tribunal found that the companies had sold intellectual property rights including domain names and trademarks to the schemes but the...

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