Curtis Banks has earmarked £ 403,000 in tax relief on pension contributions after the tax officer won a major industry case.
According to the annual results released this morning (April 7) by the self-invested private pension company, the company believes that problems with tax breaks for contributions in kind are “most likely” to incur costs.
It did so after HM Revenue and Customs asked all Sipp providers if they could provide pension contributions in kind.
With in-specie contributions, assets such as property or shares are transferred to a sipp without first being converted into cash.
In May 2020, the Supreme Tribunal ruled that the pension tax exemption could not be applied to intra-species contributions and paved the way for the tax official to reclaim millions.
Many vendors had acted in good faith on the guidance in the Pension Tax Guide, which set out a procedure for treating the transfer of in-kind assets as a contribution for tax relief purposes.
At the end of last year (December 2020), HMRC updated its guidelines on benefits in kind to clarify when tax breaks will come into effect.
Curtis Banks stated, “The group has been in correspondence with HMRC for some time regarding processes and documentation related to in-kind benefits.
“After a positive outcome for HMRC in an appeal against the decision of the First-Tier Tribunal in favor of another Sipp operator in a similar case and after seeking further legal advice, the group now believes it is likely that some Costs Are Associated The liability is borne by the group and has set aside £ 403,000 to reflect this. “
Curtis Banks added that this was an industry-wide problem affecting other Sipp operators who had been questioned by the entire industry.
However, it was noted that “Directors now believe it is likely that the group will incur some costs associated with this issue”.
Jane Ridgley, Chief Operating Officer, told FTAdviser, “Given our size, we are not immune to some of the challenges we are facing today. Therefore, at this point in time, it is only a provision in case we should not be able to get this money back through other means. “
For the twelve months ended December 31, 2020, Curtis Banks’ profit before tax declined 32 percent to £ 7.4 million from £ 10.9 million the previous year.
This included one-time costs of GBP 3.5 million that arose during the year due to previously announced restructuring activities and acquisition-related costs.
Curtis Banks said, however, that it measures its performance in terms of adjusted profit before tax, as this is “intended to better reflect the underlying results of the business by adjusting for those items that do not result from the underlying business areas of the business”.
Adjusted profit before tax remained stable at £ 13.4m.
Assets under management increased from £ 29.1 billion in 2019 to £ 32.4 billion in 2020.