Transfer was an unauthorised payment

Mr Clark was a retired businessman who set up two self-invested pension schemes (SIPPs). He decided to transfer the funds held in one of the plans because he was unhappy with the investment returns. Acting on professional financial advice he implemented the transfers in a series of steps. HMRC said the transfers were unauthorised payments (FA 2004 s 208 and 209) and raised a discovery assessment.

The First-tier Tribunal and Upper Tribunal dismissed the taxpayer’s appeal. Lord Justice Henderson in the Court of Appeal dealt first with whether transfer of funds was a payment. The judge concluded it was. The money was intended to pass from one pension scheme to another – legal title passed from one to the other. From a ‘practical and common-sense perspective’ it was not relevant that it later transpired the transfer was defective. Further it seemed ‘implausible’ that parliament would have intended...