Newsletter 39, which appeared this week on HMRC's website although dated 29 December (see next para), briefly publicises the PBR (9 December 2009) changes to the anti-forestalling regime. It also mentions the current Treasury consultation on how to implement the restriction of pensions tax relief for individuals with income of £150,000 or over from April 2011.

Quite separately, elsewhere on the website HMRC has issued a two-page factsheet on this subject. To date, however, its existence remains unknown to many, because it has not yet been publicised on either the HMRC What's New page or the PSS News page. Aries drew this to the attention of HMRC PSS, who explained that there are a number of internal departmental processes to get material published. Most of these processes are outside PSS control and this can lead to a delay that Aries understands sometimes can amount to several weeks. PBR material, however, circumvents this by having immediate publication without a what's new, hence HMRC's decision on this occasion to use this route. HMRC is currently reviewing all the restricting relief information on the website, including the factsheet, with a view to providing a single point of access to all of it.

Meanwhile, Newsletter 39 goes on to announce a new form for a registered pension scheme to formally register to receive repayment of tax deducted at source from investment income. Requests have to be made by the legal owner of the assets, for example the trustee(s). HMRC presently does not hold this information, as when a pension scheme is registered for tax relief and exemption they only require details of the scheme administrator. Another new form is being introduced to enable trustees to authorise HMRC to make repayments to a third party.

This being Britain, of course terms and conditions apply. Besides having to fill in a form, HMRC has set a minimum value for in-year repayment requests of £5,000, the acceptance of no more than one request per month (but there are exceptions) and in-year repayment requests can only be made in-year. These changes are being made "to improve the repayment processes and their security for customers and HMRC".

There is a paragraph headed 'Default of scheme administrator's liability', referring to RPSM 023.09.000 (this is the Contents page covering deregistration; a more helpful link would have been to RPSM 023.02.060) for a statement of HMRC's interpretation of s.272 FA 2004. This is all about who becomes responsible for the duties (and liabilities for tax and penalties) of the Scheme Administrator, if that person has ceased to exist.

For the vast majority of life offices' defined contribution occupational money purchase pension schemes, the employer is also the trustee and therefore the Scheme Administrator. When the employer goes out of business there ceases to be a Scheme Administrator. It is apparently HMRC's opinion that the life office (or third party administrator) would be able to be appointed as Scheme Administrator as they "control the management of the scheme" under Head 2 of s.272. However, as the insurance company acts on the instructions of the trustee on the normal day-to-day business of the scheme, it is difficult to see on what basis HMRC can argue that the insurance company "controls the management of the scheme".

There is widespread concern about the risk of incurring fines on reporting, even where all that is to be reported is that the scheme has wound up. Pension Schemes Online requires the reporter to tick a box labelled 'reporting as Scheme Administrator'. HMRC has been warned that the industry will not report in these circumstances if there is a risk of a fine.

The Newsletter fails to address this concern. However, Aries has been pursuing the matter with HMRC and it is now on the agenda for a meeting of the Joint Working Group on 28 January, where both the ABI and the SPC representatives will be pressing the case for a more reasonable approach.

Finally, of particular interest to AMPS Members and other SSAS and SIPP providers, HMRC has added to the guidance it provided regarding security/charging orders in Newsletter 37 last May. The issue there was the possibility of an unauthorised payment charge if the scheme acquired an interest in taxable property, where such property has been used in respect of security for a loan or charging order taken out against a defaulting tenant, eg to force the sale of a director's house.

Newsletter 39 clarifies the tax position where as part of a member-directed pension scheme making an authorised employer loan within s.179 FA 2004 (as amended by para 11 Sch 23 FA 2006) it has put in place the necessary legal first charge but over assets that are taxable property.  HMRC now says that although an interest in taxable property is created at the point a first charge is put in place, giving rise to an unauthorised payment, that payment would be minimal as it is likely that any fees or costs associated with acquiring the interest, on which the unauthorised payment is based, would be low.  Subsequently however, if the employer defaults on the loan the scheme may call in its charge and this will usually lead to the scheme obtaining additional rights, such as a right of occupation.  This acquisition of a further interest in the taxable property will create an unauthorised payment based on its market value.

HMRC say

"The new practice applies from the date of this newsletter.  We will not seek to review any case where a first charge has already been put in place over taxable property and acting on our previous view its creation has not been treated as the acquisition of an interest in taxable property."

Normal Minimum Pension Age

This week HMRC has also published a new FAQs document, complementing the guidance in Newsletter 38 on the practical interpretation and operation of the legislation governing the step-change in NMPA from 50 to 55 on 6 April 2010. The new guidance is aimed especially at scheme members below age 55 who are contemplating taking benefits.

Unfortunately, neither the Newsletter nor the factsheet cover two specific situations that HMRC has been asked about:

• Transfers of USP to USP after 5 April 2010 for somebody who reached NMPA of 50 at original designation but is below the new NMPA when transferring.
• Purchase of a lifetime annuity from an existing USP funds after 5 April 2010 but before the individual reaches age 55.

Aries understands that HMRC has confirmed that there is no problem with such cases, but it is disappointing that this has not been included in these official publications.

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