Widow of man conned out of pension savings to lose half the compensation to tax | HMRC

The family of a deceased man who was defrauded of his retirement savings after investing in the Norton Motorcycles pension scam will lose almost half of his subsequent compensation award due to a little-known tax rule.

The long-running battle to win awards from the Fraud Compensation Fund (FCF) meant Robert Dewar’s pension would not be repaid until 2024, five years after his death at the age of 64.

Dewar’s widow, Susan, expected to receive her pension tax-free; spouse dies before age 75.

However, an obscure clause in HM Revenue and Customs rules means the transfer of the £114,000 owed will be taxed because it is made more than two years after death, leaving him facing a bill of around £50,000.

Dewar daughter Sally Holmes said: “When my father transferred his pension into what was classed as a legitimate scheme at the time, there was nothing we could do about what happened. The only way we could make any recourse was through the Fraud Compensation Fund, which had to take a number of years and therefore guaranteed the tax burden. This was inevitable because of the way the system was set up.”

News of the possible tax bill is a fresh blow for the family, who have become some of the most vocal campaigners during the long fight to win compensation for victims.

The scandal began in 2012 and 2013, when more than 200 people fell victim to a “pension release scam”, deceived into allowing around £11.5 million to be transferred from their existing pension plans.

Most of these funds were then transferred to three Norton pension plans, of which the company’s former owner Stuart Garner is the trustee. The funds disappeared after being directly deposited into the car brand, which dates back to the 19th century and has high-profile fans including revolutionary car enthusiasts. Ernesto “Che” Guevara and actor Keanu Reeves.

In 2022, Garner pleaded guilty to illegally investing millions of pounds of retirement savings into his own businesses. he took eight months imprisonmentHe was suspended for two years. Garner has always insisted that he, too, was a victim of the first freedom scam.

The conviction represented a huge loss of reputation for the entrepreneur, who used the Norton brand to secure a cameo for himself in the 2015 Bond film Spectre and traveled to China with a government trade delegation during Theresa May’s premiership.

Last year FCF paid out £9.4 million to three pension schemes that collapsed during the scandal, more than a decade after victims lost their life savings.

A spokesman for HMRC said: “We know that behind every death benefit there is a loss and we sympathize with those affected. “If a person dies before the age of 75, a lump sum pension benefit can be paid tax-free if the payment is made within two years of the date the pension scheme first became aware of the death.

“We recognize that reasons for not meeting this requirement may be beyond individual control, but the legislation does not provide for any discretion over this charge even in exceptional circumstances.”