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Pension election accepted, nine years late

The FTT has accepted the taxpayer had a reasonable excuse for apparently registering his pension for lifetime allowance protection nine years after the notification deadline.  

5th May 2020
Tax writer
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Peter Hayes (TC07586) missed the deadline of 5 April 2009 for registering his pension for “lifetime allowance protection” (FA 2004 Sch 36), as HMRC received his notification in October 2018. His only hope was to convince the tax tribunal he had a reasonable excuse for the delay, which covered the entire period.

Why it mattered

Following the changes made by FA 2004, taxpayers would be subject to a “lifetime allowance charge” (LTAC) if the value of their pension rights at the time of retirement exceeded to lifetime allowance (at that stage £1.5 million).

Individuals whose pension rights already exceeded £1.5 million in value as at 6 April 2006 (Sch 36 para 7: “primary protection”), or those who undertook to make no further additions to the value (Sch 36 para 12: “enhanced protection”), could claim “protection” by notifying HMRC no later than 5 April 2009. This protection would mean that they were not subject to the LTAC regardless of the final value of their pensions.

An important element of the legislation is that HMRC had no discretion over whether or not to grant protection. As long as the individual satisfied the requirements, and submitted his claim (on form APSS 200) by 5 April 2009, HMRC was required to issue a certificate of protection to the individual.

Back story

In April 2006 Hayes, a senior executive of the Royal Bank of Scotland Group, had pension rights worth just over £2 million and chose to make no additions to his pension rights. Discussions between Hayes, his employer and his advisers KPMG resulted in a consensus that he should register for both primary and enhanced protection. He signed a form APSS 200 prepared for him by his employer on 20 July 2006. As was his usual practice, he retained a copy and passed the claim form to his secretary for posting.

On 30 April 2018 Hayes retired aged 64, and in September and October 2018 he undertook a review of his pension arrangements with the assistance of his advisers, who discovered that HMRC had no record of having received his APSS 200. On 26 October 2018, Hayes sent HMRC a copy of the form which he had originally submitted twelve years previously.

HMRC rejected his application for pension protection, on the basis that it had been submitted after the statutory deadline. Hayes appealed, but HMRC restated its view that he was out of time.

FTT hearing

Hayes pointed out that he was not in fact claiming to have a reasonable excuse for late notification: his argument was that “he had in fact submitted the notification more than two years before the deadline”.

The judge considered that the facts and evidence all supported that view:

  • Hayes had retained a copy of the form, clearly signed and dated in July 2006. He had also retained the letter from RBS Group which sent him the completed form, which had been annotated by him with a tick, the date and his initials (his standard way of indicating that a matter had been dealt with).
  • The executive secretarial team at RBS were experienced and efficient: by passing the form to his secretary to post, Hayes would have had full confidence that it had in fact been posted – he would have had no reason to ask for proof of postage.
  • Everything he had been told about the election for protection had stressed the fact that HMRC had no discretion to refuse his claim – “he would not have been on notice to look for a reply”.
  • Hayes had no need to seek financial advice in the 12 years leading to his retirement, so it is reasonable that he would not have checked up on his certification status (which he believed had been settled by his actions in July 2006).

HMRC’s arguments

HMRC argued that Hayes should have actively followed up on the non-appearance of a certificate in response to his pension protection claim.

It cited Yablon (TC05539) in which the FTT had refused the taxpayer’s appeal on the basis that he had not actively checked that the adviser he thought had submitted his claim had actually done so.

Hayes pointed out that there was a fundamental difference between that case and his own: Yablon appeared to have had no reason to believe that his pension protection was in place, and so ought to be expected to make follow-up enquiries. Hayes, by contrast, had every reason to believe that he was protected “and therefore less reason to check”.


The judge noted the FTT’s comment in Irby (TC01979), that “it was not for the tribunal to judge whether there was a more prudent course of action that [he] could have taken, but to determine whether the action he did take was the action of a reasonable person in the circumstances”.

Based upon the evidence, it seemed that Hayes had behaved reasonably in believing that his claim form would have been received by, and actioned by, HMRC up until Autumn 2018 (when it became apparent that it had not). Subsequently, Hayes lost no time in remedying the “omission” by providing HMRC with a copy of the missing form.

There was in fact a reasonable excuse, and the FTT directed HMRC to process Hayes’ claim for primary and enhanced protection. 

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