HMRC has been told to allow pension tax relief at source on non-cash contributions, granting a provisional reprieve on what could amount to millions of pounds in tax.
These 'in-specie' contributions are where property, shares or other assets are used to contribute to a pension, instead of cash. Following these in-specie contributions, Sipp firms can claim tax relief back from HMRC, the same as for normal cash contributions.
Two years ago HMRC challenged certain contribution agreements. In August 2016 Citywire's New Model Adviser® revealed that a number of Sipp providers had suspended in specie contributions over fears HMRC was changing its tax relief position.
HMRC then wrote to Sipp providers asking them to pay back tax relief on in-specie contributions, with the assessment backdated to the 2012/13 tax year.
Citywire reports that in a ruling on 10 March, Judge Heather Gething ruled against HMRC’s decision, allowing the appeal by the Sipp providers. She said the meaning of the term ‘contribution paid’ was ‘wide enough to cover a transfer of assets in satisfaction of a debt as occurred in this case’.
Tax does have to be taxing.
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