Finance Bill

House of Commons

Session 2003 - 04
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Finance Bill

Finance Bill
Part 4 — Pension schemes etc
Chapter 7 — Compliance
209

Scheme administrator
257
Meaning of “scheme administrator”
(1)
References in this Part to the scheme administrator, in relation to a pension
scheme, are to the person who is, or persons who are, appointed in accordance
with the rules of the pension scheme to be responsible for the discharge of the
5
functions conferred or imposed on the scheme administrator of the pension
scheme by and under this Part.
(2)
But a person cannot be the person who is, or one of the persons who are, the
scheme administrator of a pension scheme unless the person—
(a)
is resident in the United Kingdom or another state which is a member
10
State or a non-member EEA State, and
(b)
has made the required declaration to the Inland Revenue.
(3)
“The required declaration” is a declaration that the person—
(a)
understands that the person will be responsible for discharging the
functions conferred or imposed on the scheme administrator of the
15
pension scheme by and under this Part, and
(b)
intends to discharge those functions at all times, whether resident in the
United Kingdom or another state which is a member State or a non-
member EEA State.
(4)
“Non-member EEA State” means a State which is a contracting party to the
20
Agreement on the European Economic Area signed at Oporto on 2nd May 1992
(as adjusted by the Protocol signed at Brussels on 17th March 1993) but which
is not a member State.
258
Liability of scheme administrator
(1)
Any liability of a person who is, or of any of the persons who are, the scheme
25
administrator of a registered pension scheme ceases to be a liability of that
person on the person ceasing to be, or to be one of the persons who is, the
scheme administrator of the pension scheme.

This subsection does not apply to a liability to pay a penalty and is subject to
subsection (4).
30
(2)
Where a person becomes, or becomes one of the persons who is, the scheme
administrator of a registered pension scheme, the person assumes any existing
liabilities of the scheme administrator of the pension scheme, other than any
liability to pay a penalty.
(3)
Subsection (4) applies where, on the person who is or the persons who are the
35
scheme administrator of a registered pension scheme ceasing to be the scheme
administrator, there is no scheme administrator of the pension scheme.
(4)
Any liability of the person or persons as scheme administrator remains a
liability of that person or those persons as if still the scheme administrator
(unless dead or having ceased to exist) until another person becomes, or other
40
persons become, the scheme administrator of the pension scheme.
(5)
But a person who retains, or persons who retain, any liability by virtue of
subsection (4) may apply to the Inland Revenue to be released from the
liability.

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Part 4 — Pension schemes etc
Chapter 7 — Compliance
210

(6)
On receipt of the application the Inland Revenue must decide whether or not
to release the applicant or applicants from the liability and must notify the
applicant, or each of the applicants, of the decision.
(7)
If the decision is not to release the applicant or applicants from the liability the
applicant or applicants may appeal against the decision.
5
(8)
The appeal is to the General Commissioners, except that the applicant or
applicants may elect (in accordance with section 46(1) of TMA 1970) to bring
the appeal before the Special Commissioners instead of the General
Commissioners.
(9)
The appeal must be brought within the period of 30 days beginning with the
10
day on which the applicant was notified of the decision.
(10)
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
15
Revenue.
(11)
The Commissioners before whom an appeal under this section is brought must
consider whether the applicant or applicants ought to have been released from
the liability.
(12)
If they decide that the applicant or applicants ought not to have been released
20
from the liability, they must dismiss the appeal.
(13)
If they decide that the applicant or applicants ought to have been released from
the liability, the applicant is, or applicants are, to be treated as having been
released from the liability (but subject to any further appeal or any
determination on, or in consequence of, a case stated).
25
259
Trustees etc. liable as scheme administrator
(1)
This section applies in relation to a registered pension scheme if—
(a)
there is no scheme administrator of the pension scheme and no-one
who remains subject to the liabilities of the scheme administrator by
virtue of section 258(4) (continuation of liability where no scheme
30
administrator),
(b)
the person who is, or all the persons who are, the scheme administrator
of the pension scheme or remain so subject cannot be traced, or
(c)
the person who is, or all of the persons who are, the scheme
administrator of the pension scheme or remain so subject are in serious
35
default.
(2)
Any person who assumes liability by reason of this section applying in relation
to the pension scheme—
(a)
is liable to pay any tax (and any interest on tax) due from the scheme
administrator of the pension scheme by virtue of this Part, and
40
(b)
is responsible for the discharge of all other obligations imposed on the
scheme administrator of the pension scheme by or under this Part.
(3)
In subsection (2)—
(a)
the references in paragraph (a) to tax, and interest on tax, include any
that has become due before this section applied in relation to the
45
pension scheme and remains unpaid, and

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Part 4 — Pension schemes etc
Chapter 7 — Compliance
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(b)
the reference in paragraph (b) to obligations includes any that have
become due before this section applied in relation to the pension
scheme and remain unsatisfied, other than any liability to pay a penalty
which has become due before this section so applied.
(4)
The following heads specify the persons who assume liability by reason of this
5
section applying in relation to the pension scheme; but if—
(a)
a person assumes, or persons assume, liability by virtue of being
specified under one head, and
(b)
that person, or any of those persons, can be traced and is not in default,

no-one assumes liability by virtue of being specified under a later head.
10

Head 1
If there are one or more trustees of the pension scheme who are resident in the
United Kingdom, that trustee or each of those trustees.
Head 2
15
If there are one or more persons who control the management of the pension
scheme, that person or each of those persons.
Head 3
If alive or still in existence, the person, or any of the persons, who established
the pension scheme and any person by whom that person, or any of those
20
persons, has been directly or indirectly succeeded in relation to the provision
of benefits under the pension scheme.
Head 4
If the pension scheme is an occupational pension scheme, any sponsoring
employer.
25
Head 5
If there are one or more trustees of the pension scheme who are not resident in
the United Kingdom, that trustee or each of those trustees.
(5)
Where a person assumes liability by reason of this section applying in relation
to the pension scheme, the Inland Revenue must, as soon as is reasonably
30
practicable, notify the person of that fact; but failure to do so does not affect the
person’s liability.
(6)
On a person being notified of having assumed liability, the person is assessable
accordingly.
(7)
For the purposes of this section a person is in default if the person—
35
(a)
has failed to pay all or any of the tax (or interest on tax) due from the
person by virtue of this Part, or
(b)
has failed to discharge any other obligation imposed on the person by
or under this Part,

and a person in default is in serious default if the Inland Revenue considers the
40
failure to be of a serious nature.
260
Members liable as scheme administrator
(1)
This section applies in relation to a registered pension scheme if—
(a)
a person has, or persons have, assumed liability by reason of section 259
(trustees etc.) applying in relation to the pension scheme,
45
(b)
the person has, or the persons have, become liable to pay tax (or interest
on tax) which became due by virtue of section 228 (scheme sanction

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Chapter 7 — Compliance
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charge) or section 231 (de-registration charge) before section 259
applied in relation to the pension scheme,
(c)
that person, or each of those persons, has failed (in whole or in part) to
satisfy the liability, and
(d)
that person, or each of those persons, has either died or ceased to exist
5
or is a person in whose case the Inland Revenue considers the person’s
failure to satisfy the liability to be of a serious nature.
(2)
Any person who was a member of the pension scheme at any time during the
relevant three-year period is liable to pay the appropriate share of the unpaid
amount, and is assessable accordingly, if—
10
(a)
any of the conditions in subsection (5) is met, and
(b)
the Inland Revenue notifies the person of the person’s liability to do so.
(3)
“The relevant three-year period” is the period of three years ending with the
date on which the liability to pay the tax arose.
(4)
The “appropriate share of the unpaid amount”, in the case of a person, is
15
where—
AA is an amount equal to aggregate of the amount of the sums and the
market value of the assets held for the purposes of the pension scheme
at the time when the liability to pay the tax arose,
AAP is an amount equal to so much of AA as, on a just and reasonable
20
apportionment, would fall to be treated as held for the purposes of the
provision under the pension scheme of benefits to or in respect of the
person or a person connected with the person, and
UT is so much of the tax (and any interest on it) as remains unpaid.
(5)
The conditions referred to in subsection (2)(a) are—
25
(a)
that the pension scheme was established by a person or body specified
in section 144(1)(a) to (g) (insurance companies etc.) and was not an
occupational pension scheme,
(b)
that at any time during the relevant three-year period the pension
scheme received a transfer value in which there were represented
30
relevant personal pension contributions made by or in respect of the
person,
(c)
that the pension scheme was an occupational pension scheme and at
any time during the relevant three-year period the person was a
controlling director of a company that was a sponsoring employer, and
35
(d)
that at any time during the relevant three-year period the pension
scheme received a transfer value in which there were represented
relevant controlling director contributions made by or in respect of the
person.
(6)
A notification under subsection (2)(b) may be included in an assessment made
40
by virtue of this section; and such an assessment made in relation to an amount
is not out of time if made within the period of three years beginning with the
date on which the person assessed first became liable to pay the amount.
(7)
“Relevant personal pension contributions” means contributions under a
pension scheme (whether or not the pension scheme from which the transfer
45
value was received) which was established by a person or body specified in
section 144(1)(a) to (g) and was not an occupational pension scheme.

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Part 4 — Pension schemes etc
Chapter 8 — Supplementary
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(8)
“Relevant controlling director contributions” means contributions under a
pension scheme (whether or not the pension scheme from which the transfer
value was received) made by reference to service (or remuneration in respect
of service) as a controlling director of a company that is a sponsoring employer.
(9)
A person is a “controlling director” of a company if the person is a director of
5
the company and is within section 417(5)(b) of ICTA (director able to control
20% of ordinary share capital) in relation to the company.
(10)
References to receipt of a transfer value by the pension scheme are to the
transfer, so as to become held for the purposes of or to represent rights under
the pension scheme, of any sums or assets held for the purposes of or
10
representing accrued rights under any other pension scheme.
(11)
Section 839 of ICTA (connected persons) applies for the purposes of this
section.
261
Supplementary
(1)
The fact that any person is liable to pay any tax or interest, or is responsible for
15
the discharge of any other obligation, under section 259 (trustees etc.) or
section 260 (members) does not relieve any other person of any liability to pay
the tax or interest, or any obligation to discharge the obligation, arising—
(a)
by reason of that other person being, or being one of the persons who
is, the scheme administrator of the pension scheme, or
20
(b)
under section 258(4) (continuation of liability where no scheme
administrator).
(2)
Where a liability imposed on the scheme administrator of a registered pension
scheme falls to be satisfied by two or more persons (whether or not they
constitute the scheme administrator), they are jointly and severally liable.
25
(3)
No liability to pay tax or interest, or other obligation, of any person in relation
to a registered pension scheme arising—
(a)
by reason of the person being, or being one of the persons who is, the
scheme administrator of the pension scheme concerned, or
(b)
under section 258(4), 259 or 260,
30

is affected by the termination of the pension scheme or by its ceasing to be a
registered pension scheme.
Chapter 8
Supplementary
Interpretation
35
262
Insurance company
(1)
In this Part “insurance company” means—
(a)
a person who has permission under Part 4 of FISMA 2000 to effect or
carry out contracts of long-term insurance, or
(b)
an EEA firm of the kind mentioned in paragraph 5(d) of Schedule 3 to
40
FISMA 2000 (certain direct insurance undertakings) which has
permission under paragraph 15 of that Schedule (as a result of

Finance Bill
Part 4 — Pension schemes etc
Chapter 8 — Supplementary
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qualifying for authorisation under paragraph 12 of that Schedule) to
effect or carry out contracts of long-term insurance.
(2)
“Contracts of long-term insurance” means contracts which fall within Part 2 of
Schedule 1 to the Financial Services and Markets Act 2000 (Regulated
Activities) Order 2001 (S.I. 2001/544).
5
263
Relevant valuation factor
(1)
For the purposes of this Part the relevant valuation factor in relation to any
registered pension scheme, or any arrangement under a registered pension
scheme, is 20.
(2)
But the Inland Revenue and the scheme administrator of any registered
10
pension scheme may agree that the relevant valuation factor in relation to the
pension scheme, or any arrangement under the pension scheme, is to be a
number greater than 20.
264
Market value
(1)
For the purposes of this Part the market value of an asset held for the purposes
15
of a pension scheme is to be determined in accordance with section 272 of
TCGA 1992.
(2)
Where an asset held for the purposes of a pension scheme is a right or interest
in respect of any money lent (directly or indirectly) to any relevant associated
person, the value of the asset is to be treated as being the amount owing
20
(including any unpaid interest) on the money lent.
(3)
The following are “relevant associated persons”—
(a)
any employer who has at any time (whether or not before the making
of the loan) made contributions under the pension scheme,
(b)
any company connected (at the time of the making of the loan or
25
subsequently) with any such employer,
(c)
any person who has at any time (whether or not before the making of
the loan) been a member of the pension scheme, and
(d)
any person connected (at the time of the making of the loan or
subsequently) with any such person.
30
(4)
Section 839 of ICTA (connected persons) applies for the purposes of this
section.
265
Other definitions
(1)
In this Part—

“the Board of Inland Revenue” means the Commissioners of Inland
35
Revenue,

“charity” has the same meaning as in section 506 of ICTA,

“employee” and “employer” have the same meaning as in the
employment income Parts of ITEPA 2003 (see sections 4 and 5 of that
Act) but include (respectively) a former employee and a former
40
employer (and “employment” is to be read accordingly),

“the Inland Revenue” means any officer of the Board of Inland Revenue,

“normal minimum pension age” means—
(a)
before 6th April 2010, 50, and

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(b)
on and after that date, 55,

“pension credit” and “pension debit” have the same meaning as in
Chapter 1 of Part 4 of WRPA (see section 46(1) of that Act) or Chapter 1
of Part 5 of WRP(NI)O 1999 (see Article 43(1) of that Order),

“pension sharing order or provision” means any order or provision
5
mentioned in section 28(1) of WRPA 1999 or Article 25(1) of WRP(NI)O
1999,

“personal representatives”, in relation to a person who has died, means—
(a)
in the United Kingdom, persons responsible for administering
the estate of the deceased, and
10
(b)
in a country or territory outside the United Kingdom, the
persons having functions under its law equivalent to those of
administering the estate of the deceased,

“retail prices index” means the general index (for all items) published by
the Office for National Statistics or, if that index is not published for a
15
relevant month, any substituted index or index figures published by
that Office,

“tax year” means, in relation to income tax, a year for which any Act
provides for income tax to be charged, and

“the tax year 2006-07” means the tax year beginning on 6th April 2006
20
(and any corresponding expression in which two years are
simultaneously mentioned is to be read in the same way).
(2)
In this Part references to payments made, or benefits provided, by a pension
scheme are to payments made or benefits provided from sums or assets held
for the purposes of the pension scheme.
25
(3)
For the purposes of this Part the sums and assets held for the purposes of an
arrangement under a pension scheme are so much of the sums and assets held
for the purposes of the pension scheme under which the arrangement is made
as are properly attributable, in accordance with the provisions of the pension
scheme and any just and reasonable apportionment, to the arrangement.
30
266
Abbreviations and general index
(1)
In this Part—

“TMA 1970” means the Taxes Management Act 1970 (c. 9),

“ICTA 1970” means the Income and Corporation Taxes Act 1970 (c. 10),

“ICTA” means the Income and Corporation Taxes Act 1988 (c. 1),
35

“TCGA 1992” means the Taxation of Chargeable Gains Act 1992 (c. 12),

“WRPA 1999” means the Welfare Reform and Pensions Act 1999 (c. 30),

“WRP(NI)O 1999” means the Welfare Reform and Pensions (Northern
Ireland) Order 1999 (S.I. 1999/ 3147 (N.I. 11)),

“FISMA 2000” means the Financial Services and Markets Act 2000 (c. 8),
40
and

“ITEPA 2003” means the Income Tax (Earnings and Pensions) Act 2003
(c. 1).
(2)
In this Part the following expressions are defined or otherwise explained by the
provisions indicated—
45

accounting period
section 834(1) of ICTA