Property Investment in SIPP

[N1]

My wife and purchased a plot of land at auction. This was a speculative purchase as the plot had previously been refused planning permission.

We have now successfully obtained planning permission to build a holiday let restricted property on the plot. There is a specific condition of the planning approval that ‘the development hereby permitted shall be used as holiday accommodation only and shall not be occupied as a person's sole or main place of residence.’ The planning application was also considered commercial for the purposes of calculating the planning fee.

I would now like to set up a company which is owned by two SIPPs (one mine, one my wife’s) to buy this plot of land from us and then build the property to be run as a furnished holiday letting.

I was wondering if the above is possible please?

[LozaACCS]

I am aware of schemes that seek to side step the rules regarding taxable property, HMRC define property as residential if it is used as a residence or is suitable for use as a residence, the planning permission is specific and I think forms the core of your view (or hope) that residential occupation is not permitted as a sole or main place of residence, I suspect that HMRC would argue that this does not preclude residential use since a person could live in it other than as their sole or main place of residence, perhaps the planning permission should have said " No residential use whatsoever"
Assuming the argument is won (which I doubt) then the question arises as to the maximum holding that the scheme can hold in the property, in a SSAS the limit is 5% for a single employer or 20% for multiple employers, In a SIPP the maximum holding is 10% where the investment is in taxable property held by a Genuinely Diverse Commercial Vehicle, (the arrangement you suggest would result in 100% ownership by the SIPP, so the property would need to be commercial beyond doubt),
It would clearly not be a GDCV
I have seen articles discussing the effect of business rates on the issue, personally I do not think this would be a defining issue, nor I think is the description as commercial in the planning process.
I would suggest a formal clearance from HMRC would not be possible given the possible future complications, I would not go ahead.

[AnthonyR]

I'd agree with Loza that a holiday let is likely to be considered a dwelling and so as soon as it's suitable for habitation there's likely to be an charge on taxable property. You can fund the development process through the pension, but you'll need to sell the property out prior to it being signed off.

Transferring the property into a company owned by the SIPP is unlikely to avoid the fact that the pension will be treated as if mainly invested in residential property and the underlying value of the property will still be treated as taxable.

I have worked with SSAS trustees in the past who have allowed for deferred consideration on a property sale, but this is becoming more and more complex and you'll need to make sure your trustees are happy with any kind of arrangement before you start things moving.