In May we took the plunge and blogged about the forthcoming money laundering regulations (which seemed to have gone largely unnoticed until that point). We highlighted some difficulties with the legislation and that it wasn’t entirely clear how they would apply to occupational pension plans. Well, the final form regulations have arrived. They came into force on 26 June 2017 and unfortunately some tweaking has further ‘muddied the laundry water’. Additional clarification is being sought from HM Treasury. In the meantime, here are our thoughts on the new regulations.

What do we know?

New provisions require the trustees of an express trust (and it’s likely that ‘express trust’ will include an occupational pension plan) to keep records about the trust including information relating to all beneficial owners of the trust. It’s likely that in the case of an occupational pension plan ‘beneficial owner’ will include all identifiable beneficiaries under the plan (i.e. active members, deferred members, pensioner members, pension credit members and anyone else in receipt of a benefit from the plan). It will also include all plan employers and the trustees themselves. If a beneficiary is part of a class of members, where not all beneficiaries have yet been identified, then only information about that category of membership would need to be recorded.

Some records relating to the plan, such as full name, date of establishment and accounting records will need to be kept, along with details of the sponsoring employer.

In addition, information about to each beneficiary will need to be kept up to date, in writing and in a readily available format. Trustees/plan administrators are likely to hold much of the information already, but perhaps not all of the possible requirements e.g. how many have a national insurance number for overseas beneficiaries?

If the occupational plan is a ‘taxable’ trust, then all of this information will also need to be provided to HMRC using an online system that HMRC is designing for this purpose and which we understand will form part of its new “Trust Register”. Under the final form regulations, the information must be provided by 31 January 2018 (and not 5 April 2018 as per the draft regulations). A plan will be a taxable trust if it is liable to pay any of the following taxes in any tax year:

  • Income tax
  • Capital gains tax
  • Inheritance tax
  • Stamp duty land tax
  • Land and buildings transaction tax (in Scotland)
  • Stamp duty reserve tax

What action should trustees be taking now?

We recommend that trustees discuss the requirement to record all relevant information with their administrators and agree who will update HMRC’s Trust Register once it becomes available for use. And, of course, we all need to wait and see how things develop – we remain hopeful that there will clarification on the extent to which the regulations apply to occupational pension plans. It may be appropriate, at that point, to amend service agreements with administrators, to ensure that they capture compliance with all of the record keeping requirements of the money laundering regulations.