Creativity is running rife in the Revenue, these days. Time was when if your pension scheme didn't conform to a basic set of rules, it had no chance of approval. Rather like the guardians of dog breeds, the Revenue recognised a few kinds of occupational pension schemes; individuals could be different in colour, but they were recognisably distinct. Then along came personal pensions: solitary like cats, but also like cats much more similar in appearance than the different breeds of dog. The Revenue approved these as well, but as we all know, cats and dogs don't get on well and the Revenue took care to ensure there was no interbreeding.

Well, until recently they did. In January 2001 it was announced that breeders could apply to register, or re-register, a dog as a cat. Of course, although such a creature might look like a cat and behave like a cat, basically it was still a dog at heart, one had to remember. To encourage the development of this strange animal, the Revenue even said that if there were difficulties, it was okay to convert just part of your dog into a cat. Dog-fanciers shook their heads and wondered.

Now the Revenue has gone one step further. No longer will it be necessary for breeders to transmogrify at least some parts of the dog into a cat, in order to get their pension scheme approved. It will actually be possible to graft the front half of a cat onto the back end of an already-registered dog, and register the cat separately. Even stranger, it will be acceptable to bolt a newly-born dog and cat together and receive two letters of approval, one for each part of this exotic new animal. Whether many people will want to do that is another matter, of course.

This innovation is included in revised Revenue procedures for dealing with applications from money purchase pension schemes to convert from Chapter I to Chapter IV approval, published this week in Pensions Update No 96. The changes have subsequently been incorporated into the website version of IR 76 (the PP Guidance Notes), downloadable as a 1.5 Mb .pdf file. They expand Part 23, previously updated as recently as 23 March (30 March, in print) 2001. The key legislation on which this guidance is based is the Personal Pension Schemes (Conversion of Retirement Benefit Schemes) Regulations 2001 [SI 2001/118].

The principal changes to IR 76 part 23 are in new paragraphs, as follows:

• para 23.2A covers the need for the employer to give due warning that contributions to any FSAVC scheme will have to stop upon conversion.

• para 23.5A states that the rules of a converted scheme must require the appointment of a pensioneer trustee if at any time the number of scheme members to whom benefits are accruing as a result of service as employees drops below 12.

• para 23.5B makes it clear that only members whose benefits have not vested (or whose benefits have been secured by annuity purchase) may be included in a conversion. In other words, members in drawdown cannot convert.

• para 23.10A requires that conversion cannot go ahead until all necessary rule amendments under Revenue requirements for Chapter I approval are in place.

• para 23.10B limits acceptable investments at conversion date to those acceptable under Chapter IV approval.

• para 23.13A emphasises there must be no outstanding actuarial valuation report at the date of conversion.

• para 23.14A distinguishes between partial conversion (some members of the Chapter I scheme converting, others - voluntarily or otherwise under Revenue rules - not) and "dual approval", whereunder either the Chapter IV section or indeed both Chapter I and Chapter IV sections are entirely new (see above).

• para 23.16 aa), introducing an additional requirement for a trustees' declaration to accompany the application for conversion or dual approval.