Finance Bill

House of Commons

Session 2003 - 04
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Other Bills before Parliament

Finance Bill

Finance Bill
Part 4 — Pension schemes etc
Chapter 7 — Compliance
205

250
Lifetime allowance enhanced protection: benefit accrual
(1)
This section applies where—
(a)
paragraph 12 of Schedule 34 (lifetime allowance charge: enhanced
protection) applies in relation to an individual, and
(b)
relevant benefit accrual occurs in relation to the individual (as to which
5
see paragraph 13 of that Schedule).
(2)
If the individual fails to notify the Inland Revenue of the relevant benefit
accrual within the period of 90 days beginning with the day on which it occurs,
the individual is liable to a penalty not exceeding £3,000.
251
False statements etc
10
(1)
A person who fraudulently or negligently makes a false statement or
representation is liable to a penalty not exceeding £3,000 if, in consequence of
the statement or representation—
(a)
that person or any other person obtains relief from, or repayment of, tax
chargeable under this Part, or
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(b)
a registered pension scheme makes a payment which is an
unauthorised payment.
(2)
A person who assists in or induces the preparation of any document which the
person knows—
(a)
is incorrect, and
20
(b)
will, or is likely to, cause a registered pension scheme to make an
unauthorised payment,

is liable to a penalty not exceeding £3,000.
252
Winding-up to facilitate payment of lump sums
(1)
This section applies where the winding-up of a registered pension scheme has
25
begun and the Inland Revenue considers the pension scheme is being wound
up wholly or mainly for the purpose specified in subsection (2).
(2)
That purpose is facilitating the payment of winding-up lump sums or winding-
up lump sum death benefits (or both) under the pension scheme.
(3)
The scheme administrator is liable to a penalty not exceeding the relevant
30
amount.
(4)
The relevant amount is £3,000 in respect of—
(a)
each member to whom a winding-up lump sum is paid under the
pension scheme, and
(b)
each member in respect of whom a winding-up lump sum death benefit
35
is paid under the pension scheme.
253
Transfers to insured schemes
(1)
This section applies where sums held for the purposes of, or representing
accrued rights under, a registered pension scheme (“the transferor scheme”)
are transferred so as to become held for the purposes of, or to represent rights
40
under, a registered pension scheme that is an insured scheme (“the transferee
scheme”).

Finance Bill
Part 4 — Pension schemes etc
Chapter 7 — Compliance
206

(2)
The scheme administrator of the transferor scheme is liable to a penalty not
exceeding £3,000 unless the sums are transferred either to the scheme
administrator of the transferee scheme or to a relevant insurance company.
(3)
In this section—

“insured scheme” means a pension scheme all the income and other assets
5
of which are invested in policies of insurance, and

“relevant insurance company” means an insurance company that issued
any of the policies of insurance.
Discharge of tax liability: good faith
254
Lifetime allowance charge
10
(1)
This section applies where the scheme administrator of a registered pension
scheme is liable to the lifetime allowance charge in respect of a benefit
crystallisation event.
(2)
The scheme administrator may apply to the Inland Revenue for the discharge
of the scheme administrator’s liability to the lifetime allowance charge in
15
respect of the benefit crystallisation event on the ground mentioned in
subsection (3).
(3)
The ground is that—
(a)
the scheme administrator reasonably believed that there was no
liability to the lifetime allowance charge in respect of the benefit
20
crystallisation event, and
(b)
in all the circumstances of the case, it would not be just and reasonable
for the scheme administrator to be liable to the lifetime allowance
charge in respect of the benefit crystallisation event.
(4)
On receiving an application under subsection (2), the Inland Revenue must
25
decide whether to discharge the scheme administrator’s liability to the lifetime
allowance charge in respect of the benefit crystallisation event.
(5)
The scheme administrator may apply to the Inland Revenue for the discharge
of part of the scheme administrator’s liability to the lifetime allowance charge
in respect of the benefit crystallisation event on the ground mentioned in
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subsection (6).
(6)
The ground is that—
(a)
the scheme administrator reasonably believed that the amount of the
lifetime allowance charge in respect of the benefit crystallisation event
was less than the actual amount, and
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(b)
in all the circumstances of the case, it would not be just and reasonable
for the scheme administrator to be liable to an amount (“the excess
amount”) equal to the difference between the amount which the
scheme administrator believed to be the amount of the charge and the
actual amount.
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(7)
On receiving an application under subsection (5), the Inland Revenue must
decide whether to discharge the scheme administrator’s liability to the lifetime
allowance charge in respect of the excess amount (or part of the excess
amount).

Finance Bill
Part 4 — Pension schemes etc
Chapter 7 — Compliance
207

(8)
The discharge of the scheme administrator’s liability to the lifetime allowance
charge (or to the excess amount or part of the excess amount) does not affect
the liability of any other person to the lifetime allowance charge.
(9)
The Inland Revenue must notify the scheme administrator of the decision on
an application under this section.
5
(10)
Regulations made by the Board of Inland Revenue may make provision
supplementing this section; and the regulations may in particular make
provision as to the time limits for the making of an application.
255
Unauthorised payments surcharge and scheme sanction charge
(1)
This section applies where—
10
(a)
a person is liable to the unauthorised payments surcharge in respect of
an unauthorised payment, or
(b)
the scheme administrator of a registered pension scheme is liable to the
scheme sanction charge in respect of a scheme chargeable payment.
(2)
The person liable to the unauthorised payments surcharge may apply to the
15
Inland Revenue for the discharge of the person’s liability to the unauthorised
payments surcharge in respect of the unauthorised payment on the ground
mentioned in subsection (3).
(3)
The ground is that in all the circumstances of the case, it would be not be just
and reasonable for the person to be liable to the unauthorised payments
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surcharge in respect of the payment.
(4)
On receiving an application by a person under subsection (2) the Inland
Revenue must decide whether to discharge the person’s liability to the
unauthorised payments surcharge in respect of the payment.
(5)
The scheme administrator may apply to the Inland Revenue for the discharge
25
of the scheme administrator’s liability to the scheme sanction charge in respect
of a scheme chargeable payment on the ground mentioned in subsection (6) or
(7).
(6)
In the case of a scheme chargeable payment which is treated as being an
unauthorised member payment by section 161 (assignment), the ground is
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that, in all the circumstances of the case, it would not be just and reasonable for
the scheme administrator to be liable to the scheme sanction charge.
(7)
In any other case, the ground is that—
(a)
the scheme administrator reasonably believed that the unauthorised
payment was not a scheme chargeable payment, and
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(b)
in all the circumstances of the case, it would not be just and reasonable
for the scheme administrator to be liable to the scheme sanction charge
in respect of the unauthorised payment.
(8)
On receiving an application under subsection (5), the Inland Revenue must
decide whether to discharge the scheme administrator’s liability to the scheme
40
sanction charge in respect of the unauthorised payment.
(9)
The Inland Revenue must notify the applicant of the decision on an application
under this section.

Finance Bill
Part 4 — Pension schemes etc
Chapter 7 — Compliance
208

(10)
Regulations made by the Board of Inland Revenue may make provision
supplementing this section; and the regulations may in particular make
provision as to the time limits for the making of an application.
256
Appeal against decision on discharge of liability
(1)
This section applies where the Inland Revenue—
5
(a)
decides to refuse an application under section 254(2) (discharge of
liability to lifetime allowance charge) or section 255 (discharge of
liability to unauthorised payments surcharge or scheme sanction
charge), or
(b)
on an application under section 254(5), decides to refuse the application
10
or to discharge the applicant’s liability to the lifetime allowance charge
in respect of part only of the excess amount.
(2)
The applicant may appeal against the decision.
(3)
The appeal is to the General Commissioners, except that the person may elect
(in accordance with section 46(1) of TMA 1970) to bring the appeal before the
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Special Commissioners instead of the General Commissioners.
(4)
Paragraphs 1, 2, 8 and 9 of Schedule 3 to TMA 1970 (rules for assigning
proceedings to General Commissioners) have effect to identify the General
Commissioners before whom an appeal under this section is to be brought, but
subject to modifications specified in an order made by the Board of Inland
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Revenue.
(5)
An appeal under this section against a decision must be brought within the
period of 30 days beginning with the day on which the applicant was given
notification of the decision.
(6)
The Commissioners before whom an appeal under subsection (1)(a) is brought
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must consider whether the applicant’s liability to the lifetime allowance
charge, unauthorised payments surcharge or scheme sanction charge ought to
have been discharged.
(7)
If they consider that the applicant’s liability ought not to have been discharged,
they must dismiss the appeal.
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(8)
If they consider that the applicant’s liability ought to have been discharged,
they must grant the application.
(9)
The Commissioners before whom an appeal under subsection (1)(b) is brought
must consider whether the applicant’s liability to the lifetime allowance charge
ought to have been discharged in respect of the excess amount or a greater part
35
of the excess amount.
(10)
If they consider that the applicant’s liability ought not to have been discharged
in respect of the excess amount or a greater part of the excess amount, they
must dismiss the appeal.
(11)
If they consider that the applicant’s liability ought to have been discharged in
40
respect of the excess amount or a greater part of the excess amount, they must
discharge the applicant’s liability in respect of the excess amount or that part
of the excess amount.