Unauthorised payment.
Where a pension scheme invests in shares of an unquoted company which holds taxable property, and the company is not classified as exempt, then it is treated as making an ‘unauthorised payment’.
An unauthorised payment will occur in the following conditions:
- Acquiring the taxable property indirectly
- Increasing interest in an indirect holding
- Improvement of taxable property held indirectly to increase its value
- The vehicle increases its holding of taxable property
- Conversion of non-taxable property into taxable property
- Value shifting
If a company has absolutely no taxable property then the pension scheme can own up to 100% of its shares.