No reason to discharge the unauthorised payment surcharge

The taxpayer undertook investments and loans involving limited liability partnerships companies and his self-invested personal pension (SIPP). These were connected with a project to develop a hotel and luxury apartments in Montenegro.

HMRC contended that the transactions were in effect a pensions liberation scheme and that the shares had no value. It imposed an unauthorised payment charge in respect of sums received from the pension fund as well as a surcharge.

The taxpayer applied to HMRC for the charge to be waived saying it was not ‘just and reasonable’ for him to pay. HMRC refused the taxpayer’s application.

The First-tier Tribunal concluded that the price paid by the SIPP to the taxpayer for his shares was more than the price that might have been expected to be paid to a person who was at arm’s length. Therefore the unauthorised payments surcharge applied.

On the unauthorised payments charge...