Unauthorised payments from pension scheme

In January 2008 Mr and Mrs W bought BFL a company that sold lighting products. The couple also owned FL. The BFL Pension Scheme (BFPS) was set up in March 2010. In November BFPS loaned £200 000 to FL. The scheme lent £200 000 to BFL in March 2011 and a further £50 000 to FL in January 2012.

After an enquiry HMRC issued discovery assessments for unauthorised payment charges and unauthorised payment surcharges relating to the first loan to FL and the loan to BFL. It also issued a discovery assessment for a scheme sanction charge.

The First-tier Tribunal allowed the taxpayer’s appeal against the sanction charge but otherwise upheld the assessments. Both parties appealed.

The first issue before the Upper Tribunal concerned HMRC’s power to assess BFL to the scheme sanction charge. The First-tier Tribunal held that it did not have the power (TMA 1970 s...