Tribunal judge Heather Gething has ruled in favour of Sippchoice.
The case revolved around whether contributions made by four members of a Sipp were ‘paid’ within the meaning of the Finance Act 2004 and therefore qualified for relief from income tax at source, as claimed by the firm.
From 6 March to 5 April 2016 Sippchoice made a claim for relief from income tax at source relating to a contribution with a net value of £68,342 made by a client called Mr Carlton into a Sipp which was constituted by a Trust Deed and Rules.
The trust had been declared by Sippchoice on 6 April 2009. HMRC denied the claim for relief.
The company contested that decision and included the denied claim in its Annual Relief at Source claim. HMRC decided to refuse that claim and the firm appealed against that decision.
In a ruling, released this week, Judge Gething said that the “meaning of ‘contribution paid’ is wide enough to cover a transfer of assets in satisfaction of a debt as occurred in this case.”
She said: “It seems to me the purpose of the post A day pension legislation was to enable and encourage taxpayers to provide for their retirement and to protect them from the tyranny of interest rates prevailing at the date of retirement -which directly affects the value of an annuity which had to be purchased within a limited period of time following retirement - and the loss of the capital value of the pension pool upon the death of the taxpayer, which has nothing to do with contribution in cash or kind.
“Preventing contributions in kind does not seem to be the mischief at which the legislation was aimed.”
She said: “In any event, the words "monetary contribution" in the Explanatory Note would be wide enough to encompass a monetary amount which is later satisfied by a transfer of shares as occurred in this case.
“The requirement for a monetary value to be stipulated is consistent with the need for the value of the contribution to be known to enable the machinery for granting relief to be implemented.”