The tax man was to slow to penalise retirement savers who had invested in a rule-breaking QROPS pension.
A judge at the First-Tier Tribunal agreed with the savers that HM Revenue & Customs issued assessments too late even though officials knew the QROPS failed the qualifying tests for the offshore pensions for expats.
The tribunal was considering four appeals against the late serving of discovery assessments on Gerrard Gordon, Gary Connell, Nicolo Martin and Ian Hills, who were all members of the Wenn International Pension Scheme based in Latvia.
The Wenns administrators listed the scheme as a QROPS with HMRC in 2009 and the four were among members who transferred pension funds into the scheme.
But the scheme was delisted after failing qualifying tests set by HMRC in 2010.
Because of the delisting, the four received the full value of their QROPS as unauthorised pension payments. Another 11 expats are believed to have transferred money into the scheme.
HMRC sent out the discovery assessments in 2014.
The QROPS members appealed against the assessments as out of time.
Summing up, tribunal judge Sarah Falk upheld the appeals as HMRC had failed to issue the documents within the legal time limit.
“Were the discoveries stale? We think they were. A delay from mid-2011 (to March or April 2014 is around three years, and we think that is too long for the discovery to retain its “essential newness”. If we were wrong about this and, by reference to the correspondence with Mr Hills, the discovery was only made in early 2012, we still think that two years is too long,” she said.
QROPS are specialist offshore pensions for British expats that offer flexible investments and tax breaks unavailable to UK retirement savers.