I posted this in January, but January isn't a time whan tax accountants have plenty of free capacity. Here is the gist of what I said:
A taxpayer took early retirement and received a lump sum from his pension scheme of about £63000. He had a secondary employment, which after 31/12/13 became his only employment. If he pays £30000 into the secondary employment's pension scheme (actually a self-employed scheme) would it be taxed?
Per HMRC's website, the recycled lump sum is only taxable if you decide to recycle it before you receive it. You have to decide in advance of receiving it. This is what RPSM04104930 of their Manual says. It also says the onus is on HMRC to prove that pre-planning took place.
This sounds too good to be true. Their key word seems to be "decides". But the legislation says this:
Nothing about "decide" only "envisage". According to the Concise Oxford Dictionary "envisage" means: " regard of or conceive of as a possibility.Form a mental picture of..." I prefer the Manual definition, which I hope is the one they work on.
Anyone coming up to retirement is capable of envisaging recycling. Have any of your correspondents has encountered a challenge by HMRC on this one?
His financial advisor said "HMRC do not take kindly to people reinvesting their lumps sums..." If we only did things HMRC take kindly to we would be failing our clients. I suspect financial advisors are over-cautious on this, since it is clear that there is no query on anyone recycling their lump sum provided they don't invest more than 30% of it, and and even if he does , provided he didn't decide in advance to do so it still doesn't attract a charge if it doesn't exceed their annual allowance or earned income., Or have I missed something?