The family of a deceased man, who was conned out of his retirement savings after investing in the Norton Motorcycles pension scam, is to lose almost half the subsequent compensation award because of a little-known tax rule.
A long-running battle to win an award from the Fraud Compensation Fund (FCF) meant that Robert Dewar’s pension was not reimbursed until 2024, five years after his death at the age of 64.
Dewar’s widow, Susan, had been expecting to inherit his pension tax free, as is typically the case when a spouse dies before the age of 75.
However, an obscure clause in HM Revenue and Customs rules means the transfer of the £114,000 owed will be taxed because it was made more than two years after death – leaving her facing a bill of about £50,000.
The Dewars’ daughter, Sally Holmes, said: “Once Dad had moved his pension, to what was classified at the time as a legitimate scheme, there was nothing we could do about what happened. The only way we could get any recourse was via the Fraud Compensation Fund, which had to take a number of years and so guaranteed the tax charge. It was inevitable because of the way the system has been set up.”
The news of the probable tax bill is another blow for a family that became one of the most vocal campaigners during a long struggle to win compensation for victims.
The scandal began when more than 200 people fell victim to a “pensions liberation fraud” during 2012 and 2013, when they were tricked into allowing about £11.5m to be transferred out of their existing retirement plans.
Most of those funds were then transferred into three Norton pension schemes of which the company’s former owner Stuart Garner was a trustee. The funds subsequently vanished after being invested directly into the heritage motoring brand, which dates back to the 19th century and has boasted high-profile devotees including the revolutionary Ernesto “Che” Guevara and the actor Keanu Reeves.
In 2022, Garner pleaded guilty to illegally investing millions of pounds of people’s retirement savings into his own businesses. He received an eight-month prison sentence, suspended for two years. Garner has always insisted he was also a victim of the initial liberation fraud.
The conviction represented a huge fall from grace for the entrepreneur, who had used Norton’s brand to secure himself a cameo role in the 2015 Bond film Spectre and travelled with a government trade mission to China on Theresa May’s jet when she was prime minister.
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Last year, the FCF paid £9.4m to the three retirement schemes that collapsed during the scandal, more than a decade after victims had seemingly lost their life savings.
A spokesperson for HMRC said: “We know behind every death benefit there is a loss, and we sympathise with those affected. If someone dies before age 75, a pension lump sum death benefit can only be paid tax-free if payment is made within two years of the pension scheme being first aware of the death.
“We appreciate the reasons for not meeting this condition can be outside individual control, but legislation does not provide any discretion over this charge, even in exceptional circumstances.”
