Provisions introduced from 1 September 2014 under the Finance Act 2014 allow HMRC to refuse to register a scheme (or to de-register an existing scheme) if the “fit and proper person” test in respect of the scheme’s administrators is not met. Schemes that are de-registered will be subject to a 40 per cent tax charge on the aggregate value of the sums and assets within the scheme, with the administrators liable for the charge. There is a right to appeal.
HMRC has now finalised the guidance which was first issued in draft form when the new measures to tackle pension liberation were announced in the Budget 2014.
The guidance is aimed at scheme administrators and trustees of registered pension schemes and pension schemes intending to register for tax relief, and includes a new section expanding on one of the factors that may lead HMRC to decide an administrator is not a fit and proper person. This is where the administrator “employs as an adviser a person who has been involved in pension liberation or tax avoidance”.
HMRC acknowledges that an employer acting as administrator may not have a detailed knowledge of pensions and tax legislation (itself a separate ground for failing to be fit and proper), and accepts that in this case the employer can employ an adviser with the necessary knowledge. However, if the adviser has been involved in pension liberation or tax avoidance, HMRC may conclude the employer is not a fit and proper person to act as administrator.
The guidance does accept that each situation will be different, but it indicates that HMRC's evaluation is likely to depend on the nature of the employer's relationship with the adviser and the extent of the adviser's involvement with the scheme.
View the guidance.