HMRC has launched an investigation into the valuations of intellectual property used to release cash from pension schemes, Money Marketing understands.
Intellectual property such as patent, trademarks, designs and copyright can be used as loans to sponsoring employers or in sale and leaseback arrangements to release cash from schemes.
The value of loans and leasebacks is determined by a valuation undertaken by a third party, typically a specialist intellectual property law firm.
But a letter from one provider to a pension client, seen by Money Marketing, says HMRC and its shares and asset valuations department is conducting a general review of valuations since May 2011.
It says the tax office is preparing a legal challenge against valuations it believes have been overstated, resulting in an incorrect amount of tax being paid.
Dentons director of technical services Martin Tilley says his firm has three or four clients using intellectual property as an asset within schemes.
He says: “We only consider intellectual property if it’s of a significant value and if a valuation specialist has been used. If you’re going to value IP properly you need to be an expert in IP and in the particular field it relates to.
“Just having a jack of all trades accountant doesn’t stack up as an in-depth professional valuation and that’s what’s come into question.
“It is a worry and we were aware HMRC was cracking down on this.”
Tilley warns if HMRC finds the valuation was inflated, the difference between the true valuation will be treated as an unauthorised payment and tax charges will apply to the recipient and the scheme.
He says: “The two charges combined usually come to a minimum of 55 per cent of the difference. If that amounts to more than 25 per cent of the value of the fund there could be a further sanction charge.”
Clifton Asset Management also accept intellectual property.
A spokesman confirms the provider “has been in dialogue with HMRC over just 13 cases since December 2012, and we have been in regular correspondence since”.
He adds: “No Clifton schemes involving intellectual property valuations have been challenged by HMRC that has resulted in an unauthorised payment charge being paid.”
HMRC declined to comment.