Accountancy firm Charterhouse LLP, which has offices in Harrow and Beaconsfield, defended its client Forde and McHugh in what it describes as a “precedent setting” victory against the Revenue in the Supreme Court.
The accountancy firm advised Forde and McHugh in the establishment of a pension scheme for the benefit of the company’s director in 2002. The scheme is known as a Funded Unapproved Retirement Benefit Scheme (FURBS) and is commonly used as a way for business owners to make retirement provisions.
Having established the scheme, Forde and McHugh transferred cash and treasury stock worth £170,000 into it, after which HMRC said National Insurance Contributions were due in respect of those assets.
The amount HMRC claimed was due was £20,000, significantly less than the amount it would cost to challenge HMRC.
However, Charterhouse said, having “recognised that HMRC’s claim was wrong [it] committed to defend the client’s position”. To help, the firm identified other parties that were interested in the matter and put together a fund to take the case forward.
The ruling last week in the Supreme Court marked the end of what Charterhouse described as a “rollercoaster ride” for its clients.
The case was initially heard by the Upper Tribunal which decided in favour of Forde and McHugh. A subsequent Court of Appeal hearing took place in December 2011 and a decision was issued in May 2012 in favour of HMRC. The decision of the Court of Appeal was appealed to the Supreme Court and the hearing took place in January 2014.
Charterhouse said the decision, in summary, means National Insurance Contributions are not payable by companies in respect of the contributions made to a FURBS. Where companies have made payments on account in the past, these should now be repaid to the company (together with interest).
Charterhouse said it is now helping “numerous other clients affected by this decision to obtain significant repayments from HMRC”.
“We will always be proactive for our clients where we believe HMRC is wrong" said Micky Ackenson, Founding Partner at Charterhouse.
“HMRC does a difficult and important job, but it does sometimes reach conclusions that need to be challenged. This ground breaking decision will have repercussions across the tax planning and pension planning industries and is a victory for hard working business owners who need to use their business assets to finance their retirement.”