UT (Tax & Chancery) UT/2023/000103 - [2025] UKUT 00102 (TCC)

Section 268 is headed “Unauthorised payments surcharge and scheme sanction charge”, and the provisions relating to the latter are as follows:

“(1)

This section applies where

(a)

…

(b)

the scheme administrator of a registered pension scheme is liable to the scheme sanction charge in respect of a scheme chargeable payment.

(2)-(4) …

(5)

The scheme administrator may apply to the Inland Revenue for the discharge of the scheme administrator's liability to the scheme sanction charge in respect of a scheme chargeable payment on the ground mentioned in subsection (6) or (7).

(6)

…

(7)

In any other case, the ground is that ̶

(a)

the scheme administrator reasonably believed that the unauthorised payment was not a scheme chargeable payment, and

(b)

in all the circumstances of the case, it would not be just and reasonable for the scheme administrator to be liable to the scheme sanction charge in respect of the unauthorised payment.

(8)

On receiving an application under subsection (5), the Inland Revenue must decide whether to discharge the scheme administrator's liability to the scheme sanction charge in respect of the unauthorised payment.

(9)

The Inland Revenue must notify the applicant of the decision on an application under this section.

(10)

Regulations made by the Board of Inland Revenue may make provision supplementing this section; and the regulations may in particular make provision as to the time limits for the making of an application.”

The Registered Pension Schemes (Discharge of Liabilities under Sections 267 and 268
of the Finance Act 2004) Regulations 2005 (“the Discharge Regs”) were made under the vires given by s 268(10).

Paragraph 3 of the Discharge Regs reads:

“(1)

Any…section 268 application must be made in writing ̶

(a)

in the case of a company, not later than six years after the end of the accounting period to which it relates…

This is subject to the following qualification.

(2)

If an assessment is made under section 36 of the Taxes Management Act 1970 (assessments for the purpose of making good any loss to the Crown from a loss of income tax, etc), the…section 268 application…must be made within two years of the date on which the assessment is issued as stated in the notice of that assessment.

(3)

A…section 268 application shall set out particulars of the ground relied on under the relevant section.”