Hursley Hill Garage Bristol Limited Pension Scheme Cas 54365 C0J9 Cas · CAS-54365-C0J9

CAS-54365-C0J9 & CAS-54368-Y5K3

Ombudsman’s Determination Applicant Mr T and Mr T (the Applicants)

Scheme Hursley Hill Garage (Bristol) Limited Pension Scheme (the SSAS)

Respondent Mattioli Woods plc (Mattioli Woods)

Outcome

Complaint summary

Background information, including submissions from the parties Flowers Hill (the Property) was purchased by the Applicants’ Self Invested Personal Pension (SIPP) in 2007. At the time the SIPP was administered by another company. In addition, the Applicants held the SSAS which was also administered by another company. The SSAS held one property, Bath Road that was opted to tax.1

In 2013 the administration of the SSAS was transferred to Mattioli Woods. In 2014, following discussions with Mattioli Woods, the Applicants transferred their SIPP arrangement to the SSAS. In August 2014, the Property was transferred in-specie to the SSAS2. The Applicants are Member-Trustees of the SSAS and Mattioli Woods is the professional Trustee.

The Applicants’ company (the Company) rented the Property from 2007 to 2022.

1 The Option to Tax allows an entity to choose to charge value added tax (VAT). Doing so would allow the entity to recover VAT on related costs. 2 This information is detailed on the Land Registry TR1 form.

1 CAS-54365-C0J9 & CAS-54368-Y5K3 The SSAS is governed by the Truste Deed and Rules dated 28 November 2018 (the Rules). Rule 6.2 states:

“Subject to subsection 33 of the Pensions Act 1995, no Trustee shall be liable for the consequence of any mistake or forgetfulness whether of law or fact of the Trustees, their agents, employees or advisers or of any of them or for any maladministration or breach of duty or trust whether by commission or omission except to the extent that it is due to his own personal conscious bad faith (or negligence in the case of a professional Trustee).”

• As at 11 November 2014, the Property had rental arrears equating to £52,450 from the Company. As the Company was a connected party, if the rental arrears were not settled, there would be significant tax charges applied to the SSAS by way of an unauthorised payment.

• At the meeting the Applicants had confirmed that work had been completed to the Property. The Applicants estimated that this work could total approximately £150,000 and they had since provided invoices detailing the work undertaken and the costs.

• Noting that the invoices had already been paid by the Company, the monies could be used to offset rental arrears and/or the payment of the loan backs. It would require an invoice from the Company inclusive of VAT, in order to offset/reimburse these costs.

• One of the Applicants had already provided the invoices for the development works which were settled by the Company. It still required an invoice from the Company for £90,646.13 dated on or prior to 5 April 2015.

• VAT would need to be included on the invoice, but this could be reclaimed via the VAT return.

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3 Mattioli Woods listed these options and the Applicants’ responses to those options .

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4 This amount was the savings that would have been made had the disbursements invoice been made.

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• Mattioli Woods repaid the VAT to HMRC from the SSAS’ bank account.

• There were further exchanges between the Applicants and Mattioli Woods.

• The Applicants referred their complaints to The Pensions Ombudsman (TPO).

• They do not have a copy of the relevant Property questionnaire or equivalent.5 There was a discrepancy with the lease and the original SIPP which resulted in the Company underpaying rent. Mattioli Woods notified the Company of the arrears, (the existence of which was not known until then), but was also aware that the Company had incurred costs refurbishing the Property which, in turn, increased the value of the Property.

• The guidance given by Mattioli Woods was that the refurbishment costs could be offset against the arrears and that this would resolve the situation. They and the Company followed that guidance.

• Mattioli Woods asked for invoices to evidence the refurbishment work and to provide an invoice from the Company to the SSAS for the total cost of the works. Mattioli Woods confirmed (in response to being specifically asked) that VAT should be applied to that invoice and that it would be reclaimed by the SSAS. It later transpired that the SSAS was not registered for VAT resulting in the reclaimed VAT having to be repaid to HMRC.

• They acted solely in reliance on Mattioli Woods’ guidance. Mattioli Woods was under a duty to give correct guidance.

• VAT was not charged on the rent. They assume this was because neither the original SIPP nor SSAS chose to elect the Property for VAT. This would have been a decision by the SIPP/SSAS, not them or the Company. The Company has always been VAT registered.

5 The Property questionnaire is a document that should have been completed by the Applicants upon the transfer of the Property to the SSAS. This would have highlighted whether or not the Property was opted to tax. 7 CAS-54365-C0J9 & CAS-54368-Y5K3 • Mattioli Woods has admitted that it made a mistake and provided incorrect guidance in relation to the SSAS. Mattioli Woods breached its duty of care to them and fell short of the standard required of a specialist firm administering and providing guidance on such schemes.6

• They relied and acted on the guidance Mattioli Woods gave them. It was reasonable for them to have done so given Mattioli Woods’ professional status. Had Mattioli Woods correctly guided them in relation to the VAT, they would not have followed the mechanism of payment set out by Mattioli Woods. Instead, they would have directed the Company to pay the arrears owed to the SSAS. This would have avoided the SSAS incurring VAT costs, which they understood had been paid to HMRC. In addition, the SSAS also failed to charge VAT on invoices to Mattioli Woods, which they understood totalled £4,042.25.

• They had incurred time and financial costs in pursuing this matter, along with a significant degree of stress and anxiety. They rely on the SSAS for their retirement fund. To have the value of the SSAS significantly diminished and for it to be subject to a high degree of uncertainty solely due to Mattioli Woods’ error had caused great anxiety.

• They also had to take a significant amount of management time from their business and experienced the inconvenience of several meetings with their accountant and solicitor. They consider that compensation of £3,000 would be an appropriate additional remedy in this respect.

• They would like to be restored to the position they would have been in as beneficiaries if it were not for Mattioli Woods’ negligent guidance. They were seeking damages in the sum of £39,911.25.

• It upheld the Applicants’ complaints and always agreed that an administrative mistake had been made because of genuine human error. This was not something it had done deliberately. The error was realised sometime after the event had taken place, and since then, several discussions had taken place with the Applicants and the Accountant, who agreed with its (Mattioli Woods’) assessment of the position.

• It accepted the situation had caused upset and inconvenience and it had tried to offer sensible and realistic solutions to resolve the issue. However, it would not pay HMRC the full amount owed by the SSAS as it had never been the intention of the SSAS to opt the Property to tax. By returning the funds to HMRC, the SSAS

6 The Applicants referred to PRIN 2.1.1(2) of the Financial Conduct Authority’s Handbook.

8 CAS-54365-C0J9 & CAS-54368-Y5K3 had not been financially impaired as it had simply returned funds which should not have been reclaimed in the first place.

• Importantly, the invoicing for the property development would still have had to be done, as the work paid for was in relation to development of the Property held in the SSAS. At the point the complaint was made, it had offered to offset fees to the value of approximately £4,042.25 along with all costs and interest charged by HMRC. An additional sum of £1,000 was offered to each of the Applicants and it agreed to cover all time costs associated with resolving this issue. However, the Applicants rejected this offer.

• It noted that the Applicants wanted to be put back into the position they would have been in as beneficiaries if it were not for its negligent advice. However, it wanted it to be noted that the complaints did not concern the financial advice they received, but about an error made with an administrative process.

• It is not a tax adviser so could not advise the Applicants on the VAT treatment, to which the Applicants sought advice from their accountant at the time.

• It had tried to work alongside the Applicants to reach a mutually agreed solution, but to date, no agreement had been reached.

Adjudicator’s Opinion

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• A payment of £4,042.25 into the SSAS as opposed to offsetting future fees.

• To pay HMRC interest and charges upon receipt of the request for repayment of the VAT.

10 CAS-54365-C0J9 & CAS-54368-Y5K3 • To pay the Applicants £1,000 each for the distress and inconvenience this matter caused.

Following the Opinion, there were further exchanges between the Adjudicator and the Applicants concerning the contents of the Opinion.

The Applicants also queried whether the Adjudicator had considered one of the issues they had raised as part of their complaint which was Mattioli Woods’ failure to elect the Property for tax. In relation to this issue the Applicants said in summary:-

• The position is that the SSAS owned two properties, the Property and a site at Bath Road.

• Mattioli Woods elected the Bath Road site for VAT but did not do the same for the Property. That failure to elect the Property (and subsequently to assume that it was elected and to give the advice it did) is fundamental to the complaint and what has led to the loss to the SSAS.

• No explanation or justification has been given for the failure to elect the Property for VAT, nor why one SSAS property was elected but the other not. The only conclusion that could be reached was that it was an oversight on the part of Mattioli Woods for which the SSAS, and they, had now suffered a loss as a result.

• It is that failure to elect the Property to tax which they did not believe had been addressed in the Adjudicator’s Opinion.

“The complaint relates to incorrect advice provided by [Mattioli Woods] in relation to the Scheme. In particular [Mattioli Woods] incorrectly advised [us] that VAT was recoverable in relation to the Property. However, contrary to that advice, the Property was not suitably VAT-elected and the Scheme has been required to pay an avoidable VAT bill.”

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• They believe the Adjudicator failed to address a fundamental part of their complaints. The issue of the non-election to VAT was raised in the original complaint as confirmed by the extract the Adjudicator had quoted from their submissions to TPO.

• It is clear that the complaint relates directly to Mattioli Woods’ failure to provide advice in relation to the election of the Property for VAT, and that as a result, advised that VAT was recoverable. One follows from the other and must be considered as a whole comprising the advice Mattioli Woods gave or did not give in relation to the VAT solution they were offering them.

• To have correctly advised them, Mattioli Woods should have identified that the Property was not registered for VAT and advised that it should be in order to achieve the aim it had proposed.

• They do not accept that the complaints can be read in the narrow way the Adjudicator had interpreted them. The complaints relate to the advice (including the lack of advice or inappropriate advice) given by Mattioli Woods relating to how to deal with VAT in relation to the Property/SSAS. That was clear from the outset and in their recent exchanges.

Ombudsman’s decision

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“This complaint relates to incorrect advice provided by [Mattioli Woods] in relation to the [SSAS]. In particular MW incorrectly advised [the Applicants] that VAT was recoverable in relation to the Property. However, contrary to that advice, the Property was not suitably VAT-elected and the [SSAS] has been required to pay an avoidable VAT bill. (…)

Chronology:

(…) At all relevant times the [SSAS] contained two properties:

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Camilla Barry

Deputy Pensions Ombudsman 29 January 2026

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