Call +44 207 306 0102 or contact us

Gareth Clark v HM Revenue and Customs [2020] EWCA Civ 204

Friday 27 March 2020

Court of Appeal pensions/tax decision on meaning of “payment” in context of unauthorised payments charge regime and on nature of “discovery” assessments

Jonathan Davey QC has received judgment from the Court of Appeal (Bean, Henderson and Davies LJJ) in an appeal concerning the meaning of “payment” in the context of the “unauthorised payment charge” regime in relation to registered pension schemes under the Finance Act 2004 (“FA 2004”). The case concerned a scheme entered into by the Appellant the purpose of which was to enable him to liberate his pension monies for personal investment in the London property market without giving rise to a charge to tax. The Court of Appeal upheld the decision of the Upper Tribunal (Tax and Chancery Chamber) (Arnold J and Judge Herrington) that the scheme did not work. The Court of Appeal held that in considering whether the tax charge imposed on unauthorised member payments by virtue of sections 208 to 210 FA 2004 applied, the question of whether a “payment” had been made fell to be answered by looking at “the practical, business reality of the transaction” (at [82]), including any composite transaction of which the payment formed part. Applying that approach, on the facts of the case, a transfer of legal title without beneficial title did constitute a “payment”. In reaching that conclusion the Court of Appeal had regard to the decision of the Court of Appeal (judgment of Chadwick LJ) in Venables v Hornby [2002] EWCA Civ 1277 and the decision of the High Court (judgment of Arden J) in Hillsdown Holdings PLC v Inland Revenue  Commissioners [1999] STC 561. On the procedural point in dispute between the parties of whether the transfer in question was properly to be regarded as part of the subject matter of the “discovery” assessment issued by HMRC, the Court provided important guidance as to the operation of the discovery provisions within section 29 of the Taxes Management Act 1970 including in relation to the question of how the scope of a discovery assessment is to be delimited. Jonathan Davey QC acts for the Respondents (HMRC) with Sam Chandler (5 Stone Buildings). Michael Jones (Gray’s Inn Tax Chambers) acts for the Appellant.

The full judgment can be read here.