Tax Office Error

Tax office makes a £75K blunder.

The Inland Revenue gave me incorrect advice regarding pension contributions that I could make. They forgot a ceiling of a % of net relevant earnings existed. They sent me a letter outlining what I could contribute. A few years later I rang the IR and pointed out their mistake and said I was over funded. I argued I should be able to keep the contributions and make further contributions, receive tax relief, as they made the error and I based my business decisions on their incorrect advice.

I heard nothing for 12 months. I complained and then the IR agreed (in writing) I could make a contribution for £75,000 (and get tax relief), before 30th April, 2003, which I did.

I received a letter stating

"the concession was made without any statutory authority as Section 638(3) of the Income and Corporation Taxes Act 1988 specifically forbids a Personal Pension scheme to accept contributions over and above the permitted maxium. I am sorry that this happend."

They now want the pension provider to repay the excess money I contributed (£53,789) and for me to lose tax relief on the entire amount.

What should I do?

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Mark Brown