Out-Law News | 02 Jul 2013 | 4:24 pm | 2 min. read
The Financial Times said that the Financial Conduct Authority (FCA) announced the move during a conference on Monday. It comes as part of a crackdown on pension liberation schemes by the regulators.
A spokesman for HMRC told Out-Law.com that he could not comment on individual cases, but that the department was taking "firm action to detect and pursue those who deliberately bend or break the rules".
"The vast majority of pension funds abide by their legal obligations, but HMRC won't hesitate to de-register a pension scheme where rules are not adhered to, including where the value of the unauthorised payments made by a scheme over a 12-month period exceeds a prescribed level," he said.
Administrators of de-registered schemes would be taxed at 40% of the total sums and assets held by the scheme immediately before it was de-registered, he said.
In a pension liberation arrangement, money representing a saver's pension rights is transferred out of that person's existing pension scheme to a new scheme, which may be based offshore. The money is then made available wholly or partly as a cash payment back to the saver, while any funds remaining tend to be invested in exotic structures that do not live up to the advertised claims. Schemes often work alongside 'introducers' or 'advisers', which try to entice members of the public through the use of spam text messages, cold calls or web promotions promising them the opportunity to release a portion of their pension savings as cash before the age of 55.
Under HMRC rules an individual can only claim pension benefits from the age of 55, unless doing so on ill-health grounds. Tax charges on unauthorised payments can be as much as 55% of the value of the payment if the scheme member is under 55.
HMRC and the Pensions Regulator are currently leading a Government-backed campaign designed to raise public awareness of the dangers of liberation schemes. Participating bodies include the FCA, Serious Fraud Office (SFO) and the Department for Work and Pensions (DWP).
Tax expert Ian Hyde of Pinsent Masons, the law firm behind Out-Law.com, said although it was good to see the authorities taking action on pension liberation, he would prefer to see HMRC "tighten up its lax registration process, to ensure those wishing to promote pension liberation never get registered in the first place".
"HMRC has for some time been looking to clamp down on pension liberation and this appears to be some action, even if it's not yet clear as to the grounds HMRC will be using," he said. "In any event, HMRC may well be chasing its tail as promoters will simply set up new schemes as soon as the existing scheme is de-registered."
Hyde said previously that HMRC should do more to make sure that registering a pension scheme with it was a sufficient guarantee of a scheme's legitimacy. Under current rules, it is the responsibility of the scheme doing the transfer to check the legitimacy of the destination scheme. Scheme administrators are also bound by a request by a pension scheme member to transfer savings.