Firm stung by £80k HMRC charge for unauthorised pension loan

Firm stung by £80k HMRC charge for unauthorised pension loan

A light fittings company has been hit with an £80,000 scheme sanction charge by HM Revenue & Customs for making an unauthorised loan from its pension fund to an affiliated business.

London-based Bella Figura, which sells luxury decorative lighting products, was slapped with the charge over a loan of £200,000 made by the Bella Figura Pension Scheme to Falken Ltd in 2010. 

Though making loans from a pension scheme to a related company is not of itself illegal, any such payment has to satisfy strict obligations set out in tax law, which a court ruled BFL had failed to abide by. 

According to reporting service Law360, the Upper Tribunal’s ruling partially overturned a 2018 decision handed down by a lower court, which would have seen BFL hit with an additional £110,000 unauthorised payments charge. 

The lower court had upheld both of the assessments made by HMRC in 2015 – a year outside the statute of limitations – accepting that an extension could be granted as carelessness had been proven.

However, the Upper Tribunal ruled that BFL had reasonably sought advice on the legality of the loan, making HMRC’s assessment on the unauthorised payments charge out of time.

Client’s reliance on adviser scrutinised

A substantial part of the hearing concerned the advice given to Anthony Wightman, the owner of BFL, by, whom Mr Wightman had hired as a practitioner for BFPS.

A judge’s summary of the 2018 case reveals that had told Mr Wightman that “they were experts in self-administered pensions and would be able to assist BFL”, and additionally that “they held themselves out as HMRC-registered, which Mr Wightman found reassuring”.

However, the judge noted that “being a HMRC-registered pensions practitioner… brought with it no assertion of any particular qualifications or approval by HMRC.”

Commenting on the case, Stephen Schofield, senior partner at law firm Pinsent Masons, said: “This case shows the importance of ensuring that those advising on pension schemes are properly qualified to do so, especially where tax charges could arise.

“Where tax charges have arisen and those involved acted in good faith, it is always worth looking carefully at whether some of the charges can be waived by HMRC.” did not respond to a request for comment.

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