Connection between investment and payment

In 2015 the taxpayer transferred his pension fund to a qualifying recognised overseas pension scheme (QROPS). The trustee of the scheme was CTMS a Gibraltar-registered company. CTMS then transferred £48 000 from the taxpayer’s pension fund to another company DMSL in consideration of 48 000 shares in a company called LRL. Shortly afterwards DMSL paid £36 480 to the taxpayer.

HMRC issued a discovery assessment on the basis that the taxpayer had received an unauthorised payment from his pension fund. He appealed.

The First-tier Tribunal confirmed first that the discovery assessment was validly made.

On whether the payment was unauthorised the taxpayer said it could not be said to be ‘from’ his pension fund as the pension scheme paid market value for the 48 000 shares in LRL which it purchased from DMSL. Therefore after the purchase of those shares DMSL could not...