You invest the SSAS cash in property, purchased from the sponsor company, lease it back to the sponsor company and then pay rent to director’s own pension scheme. Proceeds circulating largely tax free, and assets can be passed down generations without liability to inheritance tax by adding the next generation as members of the scheme. What’s not to like?
Some even sell their own-company intellectual property (IP) into the schemes. That is one very inventive way of getting a cash injection into a firm….the employer sells its IP to its own self-administered pension fund and then leases it back. What's not to like?
Well in this case, quite a lot and HMRC spilt their cornflakes and challenged the case. The Trustees had put forward just a domain name and a photo of a director and used that for the transaction. HMRC said that this transaction was overvalued, and the net result was that the employer received pension fund cash for the sale of very little, which therefore created an unauthorised payment and a penalty and tax charge. The Tax Tribunal agreed, and said that the valuation expert used lacked commercial reality and the pension trustees (who were also directors of the company) were called out for their cavalier approach to due diligence. It did not work, and we do not recommend that you try this on. But follow the story and you begin to get an understanding of the scope of what may be possible inside SSAS schemes.