GUY BOARDMAN v Revenue & Customs (INCOME TAX - pensions - unauthorised payment charge - whether price paid by scheme in excess of arm's length - yes) [2022] UKFTT 238 (TC) (03 August 2022)

GUY BOARDMAN v Revenue & Customs (INCOME TAX - pensions - unauthorised payment charge - whether price paid by scheme in excess of arm's length - yes) [2022] UKFTT 238 (TC) (03 August 2022)

The Tribunal found that the price paid by the SIPP for the shares in Omega 4 Ltd and Omega 9 Ltd exceeded the amount that might be expected to be paid at arm's length, as a hypothetical purchaser would have concluded the shares alone had no value without the associated LLP interest. The arrangements were not at arm's length, and the surcharge was correctly imposed. It was not just and reasonable to discharge the surcharge, as Mr Boardman failed to exercise due diligence and the purpose of the surcharge is to prevent unauthorised payments and abuse.

Citation
[2022] UKFTT 238 (TC)
Parties
Appellant: Mr Guy Boardman; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
03 August 2022
Procedural Posture
Income Tax Appeal / First Tier Tribunal (tax) Judgment
Outcome
Appeal dismissed subject to amendment requested by Respondents
Legal Topics
Income Tax, Pension Schemes, Unauthorised Payment Charge, Arm's Length Transactions, Surcharge Discharge, Valuation of Unquoted Shares
Tax Law Pensions Law Income Tax Pension Schemes Unauthorised Payment Charge Arm's Length Transactions Surcharge Discharge Valuation of Unquoted Shares

Case Brief

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Parties

Mr Guy Boardman

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

Income Tax Appeal / First Tier Tribunal (tax) Judgment

Legal Issues

  1. 1 Whether the price paid by the pension scheme for shares exceeded an arm's length amount under FA 2004 s164 and s171
  2. 2 Whether it is just and reasonable to discharge the unauthorised payments surcharge under FA 2004 s268
  3. 3 Whether distributions were made by the LLPs

Ratio Decidendi

The Tribunal found that the price paid by the SIPP for the shares in Omega 4 Ltd and Omega 9 Ltd exceeded the amount that might be expected to be paid at arm's length, as a hypothetical purchaser would have concluded the shares alone had no value without the associated LLP interest. The arrangements were not at arm's length, and the surcharge was correctly imposed. It was not just and reasonable to discharge the surcharge, as Mr Boardman failed to exercise due diligence and the purpose of the surcharge is to prevent unauthorised payments and abuse.

Court Disposition

Appeal dismissed subject to amendment requested by Respondents

Orders

  • The unauthorised payments charge and surcharge are upheld.
  • Amendment to the assessment as requested by HMRC is allowed.