HMRC Sipp tax case returns to court

The tax office was given permission to bring its case to the upper tier tribunal last week, after being rejected by the first tier earlier this year.

The case centres on Marcus Carlton, a client of Sippchoice who made a claim for relief from income tax at source in respect to a contribution worth £68,342 in the period 6 March to 5 April 2016.

HMRC denied the claim for relief and Sippchoice contested that decision and included the denied claim in its annual relief at source.

But HMRC refused that claim, leading to Sippchoice, which is now owned by Dentons Pensions Management, appealing the decision.

Sippchoice won its appeal at the first-tier tribunal in March, after Judge Heather Gething said the meaning of "contribution paid" was "wide enough to cover a transfer of assets in satisfaction of a debt as occurred in this case".

In-specie contributions are where assets such as property or shares are transferred into a Sipp without first being converted into cash.

In theory the scheme administrator can claim basic rate tax relief on these contributions from HMRC while the member can claim any tax relief above the basic rate, in the same way as with cash contributions.

But HMRC appeared to change its stance on allowing tax relief in 2016, leading to providers suspending such contributions and gearing up for a fight through the legal channels.

It was feared the taxman would come back and claim millions of pounds from clients across the Sipp industry.

Sipp provider Mattioli Woods’ accounts for 2017, for instance, showed that company alone expected to receive assessment notices for up to £900,000, which it said it would appeal.

Mark Smith, chief operating officer at the firm, said the decision "just pushes any resolution to the issue back further for the industry so we will all have to wait and see".

He added a number of providers were in similar positions, indicating the final decision could have ramifications for large parts of the industry.

carmen.reichman@ft.com