The arrangements here sought to avoid tax on a loan by a pension scheme to a member of the scheme, which would ordinarily be caught by the unauthorised payment charge. The arrangement involved the purchase by the pension scheme of an ‘investment product’, and the transfer of that investment product to the member of the scheme who agreed to pay for the product over a period of time. The investment product was then cancelled, resulting in the member receiving a sum representing the value of that investment. The ‘receiving the value’ point was contested by the scheme administrator who contended that the arrangement did not involve a loan and that, having sold the investment product to the member, ‘it was entirely up to [the member] what he did with it’.
Somewhat unsurprisingly, the GAAR advisory panel found the arrangements to ‘involve abnormal and contrived steps designed to produce a non-taxable transaction that, economically speaking, is to all intents and purposes identical to a taxable transaction (a loan), each of which are indicators that the arrangements are abusive.’
The arrangements here sought to avoid tax on a loan by a pension scheme to a member of the scheme, which would ordinarily be caught by the unauthorised payment charge. The arrangement involved the purchase by the pension scheme of an ‘investment product’, and the transfer of that investment product to the member of the scheme who agreed to pay for the product over a period of time. The investment product was then cancelled, resulting in the member receiving a sum representing the value of that investment. The ‘receiving the value’ point was contested by the scheme administrator who contended that the arrangement did not involve a loan and that, having sold the investment product to the member, ‘it was entirely up to [the member] what he did with it’.
Somewhat unsurprisingly, the GAAR advisory panel found the arrangements to ‘involve abnormal and contrived steps designed to produce a non-taxable transaction that, economically speaking, is to all intents and purposes identical to a taxable transaction (a loan), each of which are indicators that the arrangements are abusive.’
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