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HMRC Wins In-Specie Pension Contributions Appeal

This has substantial implications for the pensions industry ...

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Posted by Helen Beaumont on 03/06/2020 @ 8:00AM

In a recent Upper-Tier Tribunal decision, HMRC was permitted to deny tax relief on some in-specie pension contributions via SIPP firms. This is despite the firms winning the case at the First-Tier Tribunal ...

The Upper-Tier Tribunal decision means HMRC can stop tax relief on in-specie pension contributions!

The Upper-Tier Tribunal decision means HMRC can stop tax relief on in-specie pension contributions!

copyright: highwaystarz / 123rf

It's a long-running battle between the SIPP firms and HMRC, and it has now finally ended. This decision means that HMRC can request tax assessments from both members and schemes against tax relief previously claimed on these contributions.

"In-specie pension contributions use property, shares or other assets from outside the pension scheme!"

HMRC began challenging SIPP firms in 2016 and at this point, a provider called Sippchoice took them to the First-Tier Tribunal and won the case in 2018. Obviously, HMRC appealed (as it does for the majority of cases awarded against it) and the Upper Tier Tribunal upheld the appeal.

In the tribunal, HMRC argued that in-specie pension contributions really shouldn't receive tax relief. The Judge agreed with this argument on the basis that 'contributions paid' could only mean contributions made in cash. Assets like property and shares weren't 'paid' so shouldn't qualify for tax relief.

However, the Upper Tier Tribunal also agreed that HMRC's pension tax guidance wasn't consistent with the relevant laws and their advice was unclear so it was understandable why SIPP firms were recommending in-specie pension contributions instead of monetary contributions.

The Judge said that, "Statements in HMRC’s manuals are merely HMRC’s interpretation of the law in their internal guidance and they do not have the force of law. We must interpret the legislation in accordance with the principles of construction described above and if we conclude, as we have, that the legislation bears a different meaning to that found in the HMRC manual, the legislation must be preferred."

"This case means substantial implications for the pensions industry!"

The Pensions Tax manual was being used in good faith by SIPP firms which set out a detailed procedure to allow assets to be used rather than actual money and tax relief to be applied accordingly. As always, I recommend seeking professional tax advice before making any in-specie pension contributions.

Until next time ...



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About Helen Beaumont ...


Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.

Tax Planning can make a considerable difference to your tax liability. Helen has specialist knowledge and experience in tax planning and uses every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.

When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.