My new client was overseas resident for 10+years and accrued deferred state pension during the period.
She took a pension lump sum last year for the deferred pension, but after moving to UK and becoming a UK resident. Consequently, paid basic rate tax on the lump sum.
I understand the tax point for pension lump sum is the year of receipt, but wonder if there is any benefit in arguing with HMRC that the deferred state pension was accrued/earned during her non-residency period and therefore should be UK tax exempt?
I am conscious of the potential foreign tax and there is no DTT provision with her former country of residence. Apologies, if this sounds bit daft, but tax is quite large which she could have possibly avoided the lump sum was taken before coming back to UK.
Just wanting see if there is any merit in pursuing this with HMRC? If so, reference to legislation/HMRC guidance would be very helpful.