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

218

 

259     

Winding-up to facilitate payment of lump sums

(1)   

This section applies where the winding-up of a registered pension scheme has

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-

5

up lump sum death benefits (or both) under the pension scheme.

(3)   

The scheme administrator is liable to a penalty not exceeding the relevant

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

10

pension scheme, and

(b)   

each member in respect of whom a winding-up lump sum death benefit

is paid under the pension scheme.

260     

Transfers to insured schemes

(1)   

This section applies where sums held for the purposes of, or representing

15

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

under, a registered pension scheme that is an insured scheme (“the transferee

scheme”).

(2)   

The scheme administrator of the transferor scheme is liable to a penalty not

20

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

of which are invested in policies of insurance, and

25

   

“relevant insurance company” means an insurance company that issued

any of the policies of insurance.

Discharge of tax liability: good faith

261     

Lifetime allowance charge

(1)   

This section applies where the scheme administrator of a registered pension

30

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

respect of the benefit crystallisation event on the ground mentioned in

35

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

crystallisation event, and

40

(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.

 

 

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

219

 

(4)   

On receiving an application under subsection (2), the Inland Revenue must

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

5

in respect of the benefit crystallisation event on the ground mentioned in

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

10

was less than the actual amount, and

(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

15

actual amount.

(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).

20

(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.

25

(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.

262     

Unauthorised payments surcharge and scheme sanction charge

(1)   

This section applies where—

30

(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

35

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

40

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

45

of the scheme administrator’s liability to the scheme sanction charge in respect

 

 

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

220

 

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 168 (assignment), the ground is

that, in all the circumstances of the case, it would not be just and reasonable for

5

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

(b)   

in all the circumstances of the case, it would not be just and reasonable

10

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

sanction charge in respect of the unauthorised payment.

15

(9)   

The Inland Revenue must notify the applicant of the decision on an application

under this section.

(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.

20

263     

Appeal against decision on discharge of liability

(1)   

This section applies where the Inland Revenue—

(a)   

decides to refuse an application under section 261(2) (discharge of

liability to lifetime allowance charge) or section 262 (discharge of

liability to unauthorised payments surcharge or scheme sanction

25

charge), or

(b)   

on an application under section 261(5), decides to refuse the application

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.

30

(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

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

35

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

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

40

notification of the decision.

(6)   

The Commissioners before whom an appeal under subsection (1)(a) is brought

must consider whether the applicant’s liability to the lifetime allowance

charge, unauthorised payments surcharge or scheme sanction charge ought to

have been discharged.

45

 

 

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

221

 

(7)   

If they consider that the applicant’s liability ought not to have been discharged,

they must dismiss the appeal.

(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

5

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

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

10

must dismiss the appeal.

(11)   

If they consider that the applicant’s liability ought to have been discharged in

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.

15

Scheme administrator

264     

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

20

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

25

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

30

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

35

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.

265     

Liability of scheme administrator

(1)   

Any liability of a person who is, or of any of the persons who are, the scheme

40

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.

 

 

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

222

 

   

This subsection does not apply to a liability to pay a penalty and is subject to

subsection (4).

(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

5

liability to pay a penalty.

(3)   

Subsection (4) applies where, on the person who is or the persons who are the

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

10

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

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

15

liability.

(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

20

applicant or applicants may appeal against the decision.

(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.

25

(9)   

The appeal must be brought within the period of 30 days beginning with the

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

30

subject to modifications specified in an order made by the Board of Inland

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.

35

(12)   

If they decide that the applicant or applicants ought not to have been released

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

40

determination on, or in consequence of, a case stated).

266     

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

45

 

 

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

223

 

virtue of section 265(4) (continuation of liability where no scheme

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 the persons who are, the scheme administrator

5

of the pension scheme or remain so subject are in serious 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

10

(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

15

pension scheme and remains unpaid, and

(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.

20

(4)   

The following heads specify the persons who assume liability by reason of this

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,

25

   

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

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.

30

Head 2

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

35

the pension scheme and any person by whom that person, or any of those

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

40

employer.

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

45

to the pension scheme, the Inland Revenue must, as soon as is reasonably

practicable, notify the person of that fact; but failure to do so does not affect the

person’s liability.

 

 

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

224

 

(6)   

For the purposes of this section a person is in default if the person—

(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,

5

   

and a person in default is in serious default if the Inland Revenue considers the

failure to be of a serious nature.

267     

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 266

10

(trustees etc.) applying in relation to the pension scheme,

(b)   

the person has, or the persons have, become liable to pay tax (or interest

on tax) which became due by virtue of section 235 (scheme sanction

charge) or section 238 (de-registration charge) before section 266

applied in relation to the pension scheme,

15

(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

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.

20

(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 if—

(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.

25

(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, isequation: cross[over[times[char[A],char[A],char[P]],times[char[A],char[A]]],times[char[U],

char[T]]]

where—

AA is an amount equal to aggregate of the amount of the sums and the

30

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 is held for the purposes of

such of the arrangements under the pension scheme as relate to the

person or a person connected with the person, and

35

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—

(a)   

that the pension scheme was established by a person or body specified

in section 151(1)(a) to (g) (insurance companies etc.) and was not an

occupational pension scheme,

40

(b)   

that at any time during the relevant three-year period the pension

scheme received a transfer value in which there were represented

relevant personal pension contributions made by or in respect of the

person,

 

 

 
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