In Greene v HMRC [2024] UKFTT 872 (TC), the taxpayer transferred his pension fund to a QROPS, and a few months later £48,000 of that fund was transferred to a company (DMSL) in consideration of the acquisition by DMSL of shares in another company (LRL): a few days later DMSL paid £36,480 to the taxpayer. HMRC issued an assessment on the basis that the taxpayer had received an unauthorised payment from his pension scheme. The taxpayer challenged the assessment, contending that the payments were part of a complex structure involving corporate seed funding companies. The FTT dismissed the challenge, finding that there was insufficient evidence to prove the taxpayer’s contentions, so that the taxpayer had not discharged the burden of proving that no tax charges arose in relation to the payment.
Although not relevant to its decision, the FTT went on to consider, and to reject, the taxpayer’s arguments based on the alleged structure. In so doing, the FTT considered whether the established facts satisfied the definition of payment in s.161(3) FA04 as including a payment made … in connection with an investment … acquired using sums or assets held for the purposes of a registered pension scheme. The taxpayer argued that the monies held by DMSL after the LRL shares had been purchased could not be part of the scheme, as that money had been spent on the LRL shares. FTT held that the test was satisfied because the taxpayer only had the opportunity to enter into the transaction because the scheme had made the investment in LRL, and DMSL only had the funds to make the payment to the taxpayer because it had received funds from the scheme.
A copy of the judgment may be found here.
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