Mattioli Woods has provisioned £900,000 for HM Revenue & Customs challenge of in-specie contributions, but indicated other providers could be facing more 'significant' bills.
As first revealed by New Model Adviser®, in 2016 HMRC blocked tax relief on in-specie contributions for 34 Sipp and SSAS players as part of an industry-wide challenge.
In-specie contribution is the use of property, shares or other assets from outside the pension scheme to contribute to a pension, instead of cash.
Following these in-specie contributions the scheme administrator claims basic rate tax relief from HMRC and any tax relief above the basic rate is claimed from HMRC by the member, the same as for cash contributions.
Earlier this year HMRC wrote to Sipp providers asking them to pay back tax relief on in-specie contributions, with the assessment backdated to the 2012/13 tax year. These bills are currently being challenged by a legal fight from law firm Pinsent Masons.
The individual tax bills for Sipp firms were previously undisclosed, but now Mattioli Woods has said in its financial statements it has set aside a total provision of £900,000.
‘There are a number of tax relief claims made on behalf of our clients that have been challenged and we expect to receive assessment notices which could amount to £900,000. These will be appealed,’ the results said.
Speaking with New Model Adviser®, Ian Mattioli, the firm’s chief executive, said this provision was for the total expected cost of HMRC’s challenge.
He added these contributions only formed a very small part of Mattioli Woods’ Sipp business but for some firms these bills could be much higher and he believes some Sipp firms have already settled with HMRC.
‘For us these contributions have never been a massive part of the business. We have got some clients who contributed part of their property but that has followed HMRC’s rules and guidance to the teeth. So we are a little bit bemused in HMRC’s positioning this and we will robustly defend that position,’ he said.
‘It will be significant for some Sipp firms and some have already negotiated a fixed price and settled by default.’