In Sippchoice Ltd v HMRC [2016] UKFTT 464 (TC), the FTT has found that HMRC was wrong to refuse Sippchoice’s application for the discharge of liability to scheme sanction charges in circumstances where it was not aware of a pension liberation scheme being operated in respect of the pension scheme’s invested funds.


Sippchoice Ltd (the Appellant) operated a self-invested personal pension scheme (SIPP), known as the Sippchoice Bespoke SIPP (the Pension Scheme), in its capacity as scheme administrator. HMRC claimed that the Pension Scheme was used as a pension liberation vehicle by allowing members to invest their funds in Imperium Enterprises Ltd (Imperium), and then indirectly accessing these funds in the form of loans before the members reached the age of 55.

HMRC argued that such loans were unauthorised member payments for the purposes of section 160(2), Finance Act 2004 (FA 2004).

Where an unauthorised member payment is made a charge to income tax known as an unauthorised payments charge may be made by HMRC under section 208, FA 2004 and such a charge was imposed by HMRC on the majority of the members of the Pension Scheme.

These assessments had given rise to appeals which had not at the time of the instant appeal been determined.

HMRC had also imposed scheme sanction charges on the Appellant in the sums of £205,307.80, and £168,545 in respect of tax years 2010/2011, and 2011/12, respectively.

The Appellant applied, pursuant to section 268(5), FA 2004, for discharge of its liability to the scheme sanction charges on the grounds set out in section 268(7), namely, that it reasonably believed any unauthorised payments were not scheme chargeable payments and it would not be just and reasonable for liability to be imposed on it. The Appellant’s application was refused by HMRC.

The Appellant appealed, pursuant to section 269, FA 2004, against the decision of HMRC to refuse its application for the discharge of the scheme sanction charges.

FTT’s decision

The Appellant submitted that it had no knowledge of the fact that loans were being made to individuals in connection with the investment of funds in shares in Imperium until 4 August 2011, when an investor in Imperium sent an email to the Appellant expressing concerns.

HMRC accepted that the Appellant did not know a pension liberation scheme was being operated, but argued that the Appellant did not take adequate steps to ensure that the Pension Scheme was not being abused. HMRC alleged that the Appellant had failed to act on the warning signs and did not, for example, ask any of the members whether they had received or been offered a loan in connection with their pension funds.

The FTT accepted the Appellant’s view that section 268 should be interpreted to include situations where the scheme administrator reasonably believed there to be no unauthorised payment and therefore reasonably believed there was no scheme chargeable payment. The  FTT accepted that the Appellant had raised concerns which it had regarding pension liberation, but these concerns had been laid to rest by misinformation and false assurances given to it by Imperium.

Accordingly, the FTT allowed the Appellant’s appeal.


In reaching its decision, the FTT considered the decision of the Court of Appeal in Moblix Ltd (in administration) and others v HMRC [2010] STC 1436, which was an MTIC case. The FTT considered that the question arising in the instant case (did the Appellant reasonably believe that no unauthorised payments were being made) raised similar evidential issues to those considered by the courts in MTIC cases. The FTT concluded that having recognised the possibility of pension liberation and made proportionate enquiries, it was reasonable for the Appellant to be satisfied with the responses it received which appeared to be genuine. This decision will be welcomed by pension scheme administrators.

A copy of the decision can be found here.