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Sipp scheme cleared over pension liberation allegations


A court has ruled that Sipp scheme operator Sippchoice should not pay sanction charges after HM Revenue & Customs claimed it was used as a pension liberation vehicle.

HMRC claimed Sippchoice allowed members to invest their funds in Imperium Enterprises and then enabled them to access them in the form of loans before the age of 55.

HMRC imposed a charge to income tax – called an unauthorised payments charge – on most of the members of the scheme.

However, Sippchoice argued imposing such a charge was not “just and reasonable” and its initial appeal was allowed by the First Tier Tribunal.

HMRC then appealed that decision to the Tax and Chancery Upper Tribunal. It argued Sippchoice had to “reasonably believe” the unauthorised payment was not a scheme chargeable payment.

It also argued some of the First Tier Tribunal’s findings were inconsistent with evidence.

HMRC’s appeal was dismissed by the Upper Tribunal. It found the initial tribunal had not made a legal error and upheld its decision.

Commenting on the case today, RPC legal director Robert Waterson says: “Though fact sensitive, this decision will be welcomed by pension administrators and provides helpful guidance on the boundaries of what the tribunals will consider to be reasonable conduct on the part of pension administrators when discharging their duties.”



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There are 4 comments at the moment, we would love to hear your opinion too.

  1. Hyman Wolanski, Managing Director, Sippchoice 20th April 2017 at 1:40 pm

    Can I please clarify and correct some matters of fact in relation to the above report?
    1. It was not the case (and HMRC did not claim) that Sippchoice enabled the members to access their pension funds in the form of loans before the age of 55. There were loans to the members but these were made outside the SIPP and without Sippchoice’s knowledge.
    2. These loans were deemed to be unauthorised payments, which triggered unauthorised payments charges on the members and scheme sanction charges on Sippchoice as the Scheme Administrator, even though Sippchoice was not a party to, and had no knowledge of, the loans.
    3. The fact that Sippchoice did not know about the loans was not challenged by HMRC. The issue was whether or not it was reasonable in the circumstances that Sippchoice did not know about the loans.
    4. Sippchoice appealed against the scheme sanction charges (not against the members’ unauthorised payments charges) and their appeal was upheld by the First-Tier Tax Tribunal who found that it was reasonable that Sippchoice did not know about the loans. HMRC then appealed, unsuccessfully, against that decision.

  2. So the loans were made by a third party, were they linked to the member’s policies or were the policies used as security for the loans.

    I take it the members were advised by this third party.

    Just trying to get my head round this.

  3. Hyman Wolanski, Managing Director, Sippchoice 21st April 2017 at 8:56 am

    David, the loans were unsecured and were conditional on the individuals investing their pension fund in Imperium Enterprises (and agreeing to repay the loan when they eventually received their tax-free cash from their pension fund). Through a roundabout route some of the money invested in Imperium Enterprises found its way back to the lender and funded the loans. Because of this unusual and convoluted structure, which deliberately distanced the loans from the pension fund, HMRC did not argue that the individuals had received a loan from their pension fund, which would be straightforward unauthorised payments. Instead, HMRC argued successfully that the loans were deemed unauthorised payments, i.e. they were treated as if they had been made from their pension fund, because, under section 161 Finance Act 2004, the loans were received in connection with an investment made by their pension fund.

    • So in simple terms, instead of applying a reasonable approach HMRC decided to get out the big stick and try to make an example of you, despite the fact that it was impossible for you to know that anything “naughty” was going on.

      Must admit I’m exceptionally concerned that nobody seems to be that concerned about HMRC having been turned into judge, jury and executioner in cases such as this, accelerated payments cases and their ability to simply take from bank accounts.

      I think the thing that makes me most concerned above all, is the apparent acquiescence to this situation, despite the fact that at a basic level tax is legalised and legally enforced theft. Necessary, but fundamentally that’s what it is.

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