Ministry of Defence Escape A Tax Bill

The Ministry of Defence (MoD) is to escape a tax bill, following a clerical error which lead it to overpay the pensions of nearly 100 armed forces veterans for decades and under normal HM Revenue and Customs rules, a series of tax hits would apply to such ‘unauthorised payments’.  However these rules only apply to funded occupation pension schemes and not to payments that come direct from the public purse.

The MoD has said it would not ask the veterans to pay it back but would ask the Treasury to write it off.  Senior pensions professional support lawyer at Allen and Overy has said “She thought the HM Revenue and Customs rule unfair and added the MoD can do it without any tax consequences, but if a private firm wanted to do this it would incur three different tax hits, so it seems to be one rule for the public sector and one for the private”.

Our view

What an utter joke!  One rule for Government and the emergency services and armed forces and one rule for the private sector.  

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