In the case of Dalriada Trustees Ltd v HMRC, the First-tier Tribunal of the Tax Chamber (FTT) has held that loans made to members under reciprocal arrangements between pension schemes gave rise to a double tax charge under the unauthorised payments provisions of the Finance Act 2004. 

The FTT also found that the statutory grounds for discharging the scheme administrator from the scheme sanction charge could not be satisfied on the grounds that there was no person who satisfied the definition of scheme administrator at the time the relevant events occurred.

The arrangements concerned involved "matching" members seeking loans so that, for example, if Member A was a member of Scheme X and Member B was a member of Scheme Y, Scheme Y would make a loan to Member A and Scheme X would make a loan to Member B.  The arrangement had been designed to circumvent the tax rules designed to prevent the making of loans to scheme members.  However, the FTT held that in such circumstances, (a) the loan to Member B would give rise to a tax charge on Member A under section 160(2)(a) FA 04 (unauthorised payment to or in respect of a member) and (b) the loan by Member B's scheme to Member A would give rise to a tax charge on Member A under section 160(2)(b) FA 04 and section 173 FA 04 (scheme to be treated as having made an unauthorised payment if asset used to provide a benefit, other than a payment, to a member).  Neither party to the case had argued for this outcome and the FTT itself said that it reached this  conclusion with "considerable reluctance".

The FTT also considered the meaning of section 268(7) of FA 04 which allows a scheme administrator to apply to be discharged from its liability to a scheme sanction charge if it reasonably believed that the unauthorised payment was not a scheme chargeable payment, and in all the circumstances of the case, it would not be just and reasonable for the scheme administrator to be liable to the scheme sanction charge in respect of the unauthorised payment.  The FTT concluded that the person whose state of mind was relevant was the person who was the administrator at the time the unauthorised payment was made, even if that was a different person from the person who had since assumed liability for the relevant tax charge as scheme administrator.  The FTT concluded that there was no person who satisfied the definition of administrator at the time the unauthorised payments were made, therefore the statutory test for discharging the scheme administrator from liability for the scheme sanction charge could not be satisfied.