Benjamin James Kent v Commissioners for Her Majesty's Revenue and Customs
Decision date: 11 December 2009
Neutral citation: [2009] UKFTT 358 (TC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
This case concerns HMRC assessments that the appellant’s transfers from two approved personal pension schemes into the Holme Plan were unauthorised because the appellant was not genuinely an employee of Holme Ltd and the Holme arrangements were a pension-liberation scheme. The Tribunal found the purported employment was a sham, upheld the assessment for tax of £18,568.15, upheld HMRC Directions excusing the trustees from PAYE liability, and upheld a 30% negligence penalty of £5,557.74.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: high
An arrangement that is merely designed to create the appearance of employment (a sham) does not satisfy the requirement that a transfer be “expressly authorised” by membership of an occupational scheme; genuine indicia of employment (real duties, control, mutual obligation and payment) are required to treat someone as an employee for pension-transfer authorisation. Trustees who took reasonable care and acted in good faith may properly be excused from PAYE liability by HMRC Directions.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The Tribunal noted that HMRC’s choice not to pursue other taxpayers for reasons such as cost or residency can be a reasonable exercise of discretion and does not of itself indicate unequal treatment; and that a nominal small payroll entry (e.g. £160) is unlikely on its own to establish genuine employment where other indicia are absent.