Sipp

BLUEUP

Hi,need some advice please.I am in income drawdown in a sipp.I have received a letter from the sipp trustees stating they have revalued an investment held in the sipp at one penny.
Question,can i buy this investment and transfer it out and pay the tax on one penny to HMRC.
If the value were to go up at a future date,would i be liable for tax and at what rate,or would the pension comp have to pay the tax as they revalued it incorrectly.
I am a basic rate tax payer.
Rgds,
Blue

mania112

What is it?

Anyway, perhaps I don't understand your question - but if you sell an investment for a penny, you'll not have the asset any more to benefit from any future growth - you'll just a penny?!

bigadaj

I think the OP considers to either have mis advised, is looking to gain from their mistake or is looking to save some tax, or a combination.

As mania says we'd need more details of the acast investment to have a better idea as well as the circumstances.

lvader

I'd be shocked if this was possible, regardless of how little it is worth.

System

BLUEUP wrote: »

Question,can i buy this investment and transfer it out and pay the tax on one penny to HMRC.

I take this to mean that it is now a worthless investment, but he would like to own it personally, rather than locked in his SIPP, because of a hunch that one day it may appreciate?
He is then asking, if this does in fact happen, will he personally be liable for CGT on his profit, or would the fact of the gain show that the pension provider had wrongly valued it, and if so, would there be any repercusions?
(a bit like re-examining IHT if a house is sold for a price way out of line with its probate value)

I would have thought a reasonable valuation at one particular time has to stand. A later revaluation in different circumstances would produce another, equally valid valuation, at that moment.

As to whether it is possible to buy, personally, an asset held in a SIPP, I don't see why not. That's the point of a SIPP, to have the freedom to buy and sell assets and investments. As long as it is genuinely and professionally valued, I can't see why it should matter who the buyer is.

mania112

I suspect this is Harlequin Investments, or something of that nature

BLUEUP

Thanks for all of the replies.To put some meat on the bones,I have a bond invested with std life for 250,000 in ARM SA.They have,are undergoing a restructure and have been less than forthcoming with info.This has been going on for two years now and may be resolved in the next few months.
One week ago I received a letter from std life saying it had valued the bond at one penny untill further info.Yes what a great day that was and top marks for their customer care.
SO,IF I can buy it for a penny and transfer it out on the chance it will have SOME VALUE.What would be the tax scenario and who would be liable for it.
This investment was done using regulated IFA' and regulated companies by the FSA.
Rgds,
blue

mania112

You had £250k in http://www.arm.co.za/ ?

And that has now been valued as 1p?

BLUEUP

YES, a quarter of a million,valued at one penny.so my view is that if I take the punt and buy it for one penny and transfer it out(if I can),what happens if it has value tax wise.If I pay the tax on one penny,then surely I have met my tax obligation.If it transspires that the bond may have a value of 30,000,who picks up the tax bill and at what rate.
Blue

grey_gym_sock

i'm not sure if you can buy an investment from your own SIPP, though it sounds reasonable if you pay the market value. or perhaps the way to do it would be to pay part of your drawdown income in specie using this investment.

however, i'd check first whether your SIPP provider is really sticking their neck and saying the value is 1p. it may just be an "indicative" value, and that they'd have to take more care with the valuation if you were taking the investment out of the SIPP like this.

supposing the valuation of 1p stands up, and you can buy the investment, and you can later sell it for £30,000, then you have a chargeable gain of £29,999 (for CGT purposes).

BLUEUP

Yes,This is their (std life's),valuation untill they decide otherwise.In the meantime I am on drawdown and comming up for a review,so it has made an enormous difference to the amount of income i receive.(fixed for the next three years)
If the CGT is 20% on the total,then that would be fine.I would take the chance.If it could be classed as an unauthorised payment from the SIPP,then it could attract 55% which is not fine.
I am just picking up the pieces here.
Blue.