Aj Bell Sipp · CAS-49346-L5Q4

CAS-49346-L5Q4

Ombudsman’s Determination Applicant Mrs T

Scheme AJ Bell SIPP (the SIPP)

Respondents AJ Bell Management Limited (AJ Bell)

Outcome

Complaint summary

Background information, including submissions from the parties The sequence of events is not in dispute, so I have only set out the salient points. I acknowledge there were other exchanges of information between all the parties.

On 18 December 2019, Mrs T sent an instruction to receive an income drawdown payment from the SIPP (the payment) via AJ Bell’s website.

On 19 December 2019, AJ Bell made the payment into Mrs T’s bank account.

On 20 December 2019, AJ Bell emailed Mrs T to confirm that the payment had been made.

On 22 December 2019, Mrs T emailed AJ Bell to say she had changed her mind and wanted to return the payment to her SIPP. She stated in this email that she had miscalculated the tax implications of the payment.

An exchange of emails then took place with AJ Bell explaining the payment could not be returned to the SIPP as this would contravene HMRC rules, while Mrs T disagreed and asked that AJ Bell permit the return of the payment as a “gesture of goodwill”.

1 CAS-49346-L5Q4 On 9 January 2020, AJ Bell emailed Mrs T to confirm that HRMC would only permit reversals in certain situations where a “genuine error” had been made, such as a technological error, or an error made on behalf of the pension administrator and it could not agree to Mrs T’s request to return the payment.

Mrs T did not accept this response and raised a formal complaint.

On 20 February 2020, AJ Bell issued its formal response to the complaint as follows:-

• As a regulated financial services provider, it had to abide by HMRC rules and regulations.

• It was unable to reverse the payment as it did not meet HMRC’s definition of a “genuine error”, which did not extend to miscalculations made by members.

Mrs T’s position:-

• She did not realise until after she had made the payment instruction that it would be subject to tax at 20% in view of her other income in the same tax year.

• The instruction to AJ Bell to make the payment was a genuine error on her part.

• If she could reverse the payment and withdraw it early in the next tax year, it would not be subject to income tax at that time.

• AJ Bell was at fault for interpreting HMRC rules too narrowly.

• HMRC was also partially at fault in this matter for providing ambiguous guidance as it provides examples where the error relates to the administrator or the IFA. However, it provides no examples where the error is made by the “pensioner”

Adjudicator’s Opinion

2 CAS-49346-L5Q4

Mrs T did not accept the Adjudicator’s Opinion and the complaint was passed to me to consider. Mrs T provided her further comments which do not change the outcome. I agree with the Adjudicator’s Opinion and note the additional points raised by Mrs T, which are summarised below:-

• She disagreed with the findings regarding HMRC’s rules which prevented AJ Bell from reversing the payment. She could find no specific HRMC rules to support that position.

• She disagreed that the payment was made on 20 December 2019. In her view, the payment was not made until it had arrived in her bank account, which occurred on 24 December 2019, two days after she instructed AJ Bell to cancel the withdrawal.

• Before 24 December 2019, the status of the payment transaction was an AJ Bell instruction to its bank which had not yet been executed and settled. Accordingly, AJ Bell was in a position to cancel the instruction before it had been settled.

Ombudsman’s decision Mrs T contended that, because she requested an income drawdown payment before considering the tax implications of this withdrawal, AJ Bell should permit her to return the payment to her SIPP as a gesture of goodwill.

AJ Bell stated it could not do this because of HMRC guidance which says such an action is not permitted unless the payment retraction was done to correct a “genuine error”.

Mrs T argued that she made a genuine error and there is nothing in HMRC’s Pensions Tax Manual that precluded her request from being treated as such.

Section PTM146200 of the Pensions Tax Manual describes a genuine error as “an inadvertent administrative failure or because of circumstances that were beyond the control of the registered pension scheme making the payment or beyond the control of the person making an inadvertent payment to the scheme”. A genuine error would be, for example, the incorrect transposing of figures or typographic errors.

Mrs T did not make a genuine error that falls into HMRC’s definition; simply she instructed payment without being certain of the impact such a payment would have on her tax position. Her “error” then is not in keeping with HMRC’s guidance in respect of genuine errors, which are clearly aimed at pension schemes and their administrators, rather than at consumers who are members of a SIPP or other pension plan.

In Mrs T’s case, her error was in failing to consider the tax implications of taking an income drawdown payment from her SIPP before making the instruction to AJ Bell. 3 CAS-49346-L5Q4 That was an error of judgement on Mrs T’s part rather than a mistake that HMRC would consider to be a genuine error. It is also not a genuine error of AJ Bell’s making and I do not consider that AJ Bell is required to return the payment to Mrs T, whether as a goodwill gesture or not.

I note Mrs T’s contention that she made the request to cancel or reverse the income drawdown payment before the monies arrived in her bank on 24 December 2019 and therefore AJ Bell should reverse the transaction.

The evidence demonstrates that AJ Bell acted swiftly on receiving the payment instruction and the payment was made within 24 hours. There is nothing in AJ Bell’s terms and conditions that suggests, once a payment is made and the money has left AJ Bell’s bank, it can be recalled before it arrives at the SIPP member’s bank.

AJ Bell has done nothing that HMRC would consider to be a genuine error and Mrs T cannot expect it to reverse the transaction it set in motion in response to her online instruction to make an income drawdown payment to her.

I do not uphold Mrs T’s complaint.

Anthony Arter

Pensions Ombudsman 20 December 2021

4