The Court of Appeal has upheld its ruling that a taxpayer must pay a 40 per cent charge after transferring funds from his pension into residential property funds.

Gareth Clark arranged a scheme to extract £2.115m from his Self-Invested Personal Pension (Sipp) to access funds by loans and investment management.

HMRC raised a discovery assessment on the basis that the transfer was not into a registered pension scheme, before levying Clark with a 40 per cent pensions unauthorised payment charge.

HMRC subsequently found that a separate transfer was, also an unauthorised payment, with the same amount of tax due, and did not raise a new assessment for the ensuing unauthorised payment charge.

Clark was unsuccessful at appealing the assessment to the First Tier Tribunal, as it found that the conditions for discovery were met and that the transfer of funds amounted to an unauthorised payment.

A further appeal to the Upper Tribunal also failed.

The Court of Appeal concluded that the transfer from the Sipp was by “a bizarre series of transactions” designed to make it appear if there was a transfer from an authorised pension scheme to another, which amounted an unauthorised payment.

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