Unauthorised payment charge on pension transfer

The taxpayer transferred her pension funds to a new self-invested personal pension plan (SIPP) with C&P SIPP. Shortly afterwards C&P SIPP invested those funds subscribing for preference shares in KJK Investments Ltd. The taxpayer then entered into a loan agreement with another company (G Loans) whereby she borrowed a sum that represented more than 25% of the funds held in the SIPP. It was a condition of the loan that the taxpayer would use her pension funds to repay the loan. 

HMRC made an unauthorised payments charge and surcharge (FA 2004 s 208 and s 209). The taxpayer appealed.

The First-tier Tribunal judge said the facts of the case were indistinguishable from those in Danvers v CRC [2017] STC 555 in which the Upper Tribunal had found the charges were correctly imposed. Therefore he was ‘bound to find’ against the taxpayer. 

The judge found that the loan to the taxpayer amounted...