HMRC to appeal Sippchoice in-specie ruling
HMRC is understood to be seeking leave to appeal a ruling which said it has to allow pension tax relief at source on in-specie Sipp contributions.
The determination was laid down by the first-tier tribunal last month and centred around whether contributions made by four members of a Sipp were ‘paid’, within the meaning of the Finance Act 2004 and therefore qualified for relief from income tax at source, as claimed by the firm.
Sippchoice, now part of Dentons, made a claim for relief from income tax at source relating to a contribution with a net value of £68,342, made by a client called Mr Carlton, into a Sipp which was constituted by a Trust Deed and Rules.
The trust had been declared by Sippchoice on 6 April 2009 but HMRC denied the claim for relief.
The company contested the decision and included the denied claim in its Annual Relief at Source claim. HMRC refused the claim and the firm appealed against that decision.
In the March ruling, Judge Gething said that the “meaning of ‘contribution paid’ is wide enough to cover a transfer of assets in satisfaction of a debt as occurred in this case.”
She said: “It seems to me the purpose of the post A day pension legislation was to enable and encourage taxpayers to provide for their retirement and to protect them from the tyranny of interest rates prevailing at the date of retirement - which directly affects the value of an annuity which had to be purchased within a limited period of time following retirement - and the loss of the capital value of the pension pool upon the death of the taxpayer, which has nothing to do with contribution in cash or kind.
“Preventing contributions in kind does not seem to be the mischief at which the legislation was aimed.”
Dentons Pension Management acquired Sippchoice at the beginning of this year and the firm said HMRC had told them it intended to appeal.
Martin Tilley, director of technical services at Dentons Pension Management, told Financial Planning Today: “HMRC actually informed the Board of Sippchoice Limited that they intended to appeal the tribunal judgement and they have 56 days from the judgment to do so. (this was 10 March)
“To date we do not know whether they have, and we have no idea on what grounds they intend to appeal.
“In the meantime, as the tribunal process is still ongoing, we have decided to retain our stance of refusing to accept in specie contributions until the matter is concluded.”
HMRC declined to comment today.