Isaac Aboagye Frempong v The Commissioners for HMRC
[2024] UKFTT 999 (TC)
James Greene v The Commissioners for HMRC
26 September 2024
[2024] UKFTT 872 (TC)
First-tier Tribunal
Mr. Greene got money from his pension in a way the taxman said wasn't allowed. The taxman made him pay extra tax. Mr. Greene argued he didn't owe the extra tax, but he couldn't prove it. The judge said he had to pay, but a bit less than originally demanded.
Key Facts
- •Mr. Greene transferred his pension fund (£192,825) to a QROPS.
- •£48,000 was transferred to DMSL for shares in LRL.
- •DMSL paid £36,480 to Mr. Greene.
- •HMRC issued a discovery assessment for £74,370.45 (later reduced to £14,592).
- •The appeal concerns the validity of the discovery assessment and the amount of overcharge.
Legal Principles
Discovery assessment validity requires both a subjective and objective element: the officer must believe (subjectively) and a reasonable officer could believe (objectively) that an insufficiency of tax exists.
Anderson v HMRC [2018] UKUT 159 (TCC)
Unauthorised payments are defined in Finance Act 2004 (FA 2004), sections 160, 164, 171, and extended to QROPS by Schedule 34 FA 2004.
Finance Act 2004
The burden of proof for a discovery assessment lies with HMRC.
Taxes Management Act 1970 (TMA) section 29
In appeals against assessments, unless the Tribunal finds the appellant overcharged, the assessment stands (TMA s 50(6)).
Taxes Management Act 1970 (TMA) section 50(6)
For an unauthorised member payment, there must be a causal link between the investment and the payment.
Danvers v HMRC [2016] UKFTT 3 (TC)
Outcomes
The discovery assessment was valid.
HMRC officer had sufficient information to reasonably believe an insufficiency of tax existed, considering the investment structure and information from CTMS. The officer's view was objectively reasonable.
Mr. Greene was not overcharged.
Insufficient evidence was presented to demonstrate the payment was authorised. Mr. Greene failed to provide evidence supporting his claim that the payment wasn't an unauthorised member payment.
The assessment is reduced to £14,592.
HMRC conceded that the original assessment was too high and the unauthorised payments surcharge didn't apply.