HMRC claimed Sippchoice allowed members to invest their funds in the now-defunct property scheme Imperium Enterprises, in which Sippchoice held 94.85% of the share capital.
Under the scheme, members of a pension scheme were allowed to access their pension funds in the form of loans if they purchased a number of Imperium shares and placed them in the Sippchoice scheme.
These loans were deemed to be unauthorised payments.
According to court documents the way the scheme worked was that an individual (the member) transferred his or her pension savings to a Sippchoice Bespoke SIPP (SB SIPP).
Then, at the request of the member, Sippchoice, as scheme administrator of the SB SIPP, invested the member’s pension savings in shares in Imperium Enterprises Ltd. Imperium then lent these funds to BOH Investments Ltd (“BOH”).
BOH then funded a subsidiary, SKW Investments by way of a share subscription, and finally, SKW made a loan back to the member of up to 25% of the value of the member’s pension savings in the SB SIPP.
As a result HMRC imposed a charge to income tax – called an unauthorised payments charge – on most of the members of the scheme as well as a sanction charge on the scheme administrator Sippchoice.
However, Sippchoice fought against the sanction charge, arguing that it was not aware of the loans to the members which were made outside the Sipp arrangement, therefore the levy was not “just and reasonable”.
The initial appeal was allowed by the First Tier Tribunal agreeing it was reasonable to assume Sippchoice did not know about the loans.
HMRC appealed that decision at a subsequent Upper Tribunal, arguing some of the First Tier Tribunal’s findings were inconsistent with the evidence.
However, this appeal has now been dismissed by the Upper Tribunal.
Hyman Wolanski, managing director of Sippchoice, said: “Sippchoice appealed against the scheme sanction charges (not against the members’ unauthorised payments charges), and their appeal was upheld by the First-Tier Tax Tribunal who found that it was reasonable that Sippchoice did not know about the loans. HMRC then appealed, unsuccessfully, against that decision.”
According to companies house, Imperium Enterprises is now in administration and its five directors, three of whom work for Sippchoice Limited, have resigned.
