The FTT has dismissed the taxpayers’ appeal in a case concerning the tax charges that are imposed if funds are wrongly transferred out of a pension fund (Morgan Lloyd Trustees Ltd & Ors v HMRC [2023] UKFTT 355 (TC)).
Considering each of the funds in question, a range of different tax issues arose. In some cases, applications were made late to HMRC and could not be allowed. In others, there was no reasonable basis on which MLT could have believed that payments made by the pension fund were not scheme chargeable payments.
The test at FA 2004, s. 268(7)(a) was therefore not satisfied.
As such, the FTT did not need to consider the test at s. 268(7)(b). Nevertheless, the tribunal commented that:
“It may be true that MLT did not intentionally circumvent the unauthorised payment rules, but it did consistently fail to apply any critical analysis to fundamental aspects of the Pension Funding Deals, which in our view amounts to at best a passive approach to the application of the rules in favour of generating fees for themselves and other members of the group.
For these reasons, had we needed to consider the second limb of s 268(7) FA 2004 we would have concluded that, in all the circumstances of the cases, it would be just and reasonable for MLT to be liable to the scheme sanction charge.”
https://www.bailii.org/uk/cases/UKFTT/TC/2023/TC08779.html
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Pension Tax Guide is a thorough and practical guide to the complexities of the UK pension rules, and to the part they play in legitimate tax planning. Suitable for accountants, tax specialists and other finance professionals, the book is written by Katharine Lindley, a client director with EQ Investors.
