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Reliance on financial adviser was reasonable excuse

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The FTT allowed a very late claim for enhanced pensions protection who found the late Dr Gibson had an excuse for the failure to notify – namely reliance on his financial adviser.

25th May 2021
Tax Writer
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The FTT had two issues to consider: whether Gibson had a reasonable excuse for failing to notify a claim for protection before 6 April 2009, and whether Gibson notified the claim without unreasonable delay after the reasonable excuse ceased.

Background

Gibson was a gastroenterologist who worked in the NHS all his working life until his retirement. He was a self-employed consultant with the NHS in 2006.

Gibson had always appointed a financial advisor to help with his affairs and had no specific pensions knowledge himself. He appointed Mr Lowe of Openwork Limited as his financial adviser in late 2005 upon the strong recommendation of a good friend.

Enhanced protection

The lifetime allowance charge arises where the value of a taxpayer’s pension funds exceeds the lifetime allowance (“LTA”) which at the relevant time in this case was £1.5 million (the LTA is now £1,073,100).

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Replies (8)

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By Paul Crowley
25th May 2021 17:39

Bit of a waste of time having deadlines if 'relying on the other person' becomes a standard catch all reasonable excuse.
Disagree that HMRC were unreasonable.

Will this now work for all the people who missed SEISS by being late, but relying on their accountant?

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By paulwakefield1
26th May 2021 07:41

"Bit of a waste of time having deadlines if 'relying on the other person' becomes a standard catch all reasonable excuse."

Are you advocating that your advice should never be relied upon and that your clients should always get a second opinion? And, in any event, it's their problem if they are not expert in the subject?

Anyway it's a shame that Dr Gibson never found out the result.

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Replying to paulwakefield1:
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By Paul Crowley
26th May 2021 09:41

paulwakefield1 wrote:

"Bit of a waste of time having deadlines if 'relying on the other person' becomes a standard catch all reasonable excuse."

Are you advocating that your advice should never be relied upon and that your clients should always get a second opinion? And, in any event, it's their problem if they are not expert in the subject?

Anyway it's a shame that Dr Gibson never found out the result.

No
I am saying that experts in the field should be responsible for their errors. That is what PII is for.
HMRC and the public purse should not be acting to rectify the errors of professionals.
If this case becomes an authority then time limits have no meaning.

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Replying to Paul Crowley:
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By johnjenkins
26th May 2021 10:44

Paul, isn't that what the FTT is there for? To decide if there was a reasonable excuse, not just take HMRC "reliance on third party isn't a reasonable excuse". I think the FTT took the view that had Dr. Gibson known that there was a mistake earlier he would have done something about it earlier. The FTT took a common sense approach and quite honestly HMRC should have accepted the grounds for reasonable excuse. I certainly don't think that this case will become an authority as I have seen many cases of "reliance" that FTT have thrown out.

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By meadowsaw227
26th May 2021 09:55

Interesting but I'm more surprised how anybody in the public sector could build up a £2.12 million pension pot.
How many more of them must there be in the NHS etc etc.

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Replying to meadowsaw227:
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By Donald MacKenzie
26th May 2021 10:37

The pension pot values do not equal payments in.
The pot is valued based on the pension payable, based on earnings and an increase in earnings near end of career increases the pension and the notional value of the pot. I think the pot valuation is 15 times pension receivable.

I had a client who did some extra work for another health authority earning, say £10k, which saw a ludicrous extra tax charge.
Let's say he earned an extra £10k but the projected increase in his pension of say £6k saw his pot increase by 15 times that, so £90k and the 90k was taxable at 41% so tax of £36.9k on £10k earned.

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Replying to meadowsaw227:
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By Rgab1947
26th May 2021 10:43

A fallacy that in the public sector you can't build up a good pension pot. They have gold plated, diamond encrusted pension schemes we in the private sector can only dream about.

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Replying to Rgab1947:
Maytuna
By DJKL
26th May 2021 15:28

Some do.

Some are not as good as they were, my wife's accrual rate with her local authority pension is lower than it used to be, the scheme rules were changed a few years ago now, but notwithstanding they are generally nor to be spurned. (Though some higher prevailing interest rates might knock the stuffing out of their valuations).

They do, of course, have possible downsides .

If I drop dead in retirement my wife will lose my state pension but depending on status likely can keep drawing from my SIPP/encash my SIPP, and probably benefit from the same income I might have been drawing before my death, family income impacted at bit but not severe, but if she drops dead in retirement we lose her state pension, 50% of her local authority pension (That is what I get as her surviving spouse) so the impact on the family budget will be far more severe, slightly galling as we have spent a working life trying to equalise savings, assets and pensions between us. (As I have pointed out to her)

In addition depending how I manage my SIPP it is perfectly possible for me to leave the bulk of its value to our kids, that is certainly not the case with a defined benefit public sector scheme.

The grass may be greener but it is also different grass.

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