Finance Bill

House of Commons

Session 2002 - 03
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Finance Bill

Finance Bill
Part 4 — Pension schemes etc
Chapter 7 — Compliance
225

(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
(d)
that at any time during the relevant three-year period the pension
scheme received a transfer value in which there were represented
5
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 in
respect of a liability under 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
10
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
value was received) which was established by a person or body specified in
15
section 151(1)(a) to (g) and was not an occupational pension scheme.
(8)
“Relevant controlling director contributions” means contributions under an
occupational 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 was a
20
sponsoring employer.
(9)
A person is a “controlling director” of a company if the person is a director of
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
25
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
representing accrued rights under any other pension scheme.
(11)
Section 839 of ICTA (connected persons) applies for the purposes of this
section.
30
268
Supplementary
(1)
The fact that any person is liable to pay any tax or interest, or is responsible for
the discharge of any other obligation, under section 266 (trustees etc.) or
section 267 (members) does not relieve any other person of any liability to pay
the tax or interest, or any obligation to discharge the obligation, arising—
35
(a)
by reason of that other person being, or being one of the persons who
is, the scheme administrator of the pension scheme, or
(b)
under section 265(4) (continuation of liability where no scheme
administrator).
(2)
Where a liability imposed on the scheme administrator of a registered pension
40
scheme falls to be satisfied by two or more persons (whether or not they
constitute the scheme administrator), they are jointly and severally liable.
(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
45
scheme administrator of the pension scheme concerned, or
(b)
under section 265(4), 266 or 267,

Finance Bill
Part 4 — Pension schemes etc
Chapter 8 — Supplementary
226


is affected by the termination of the pension scheme or by its ceasing to be a
registered pension scheme.
Chapter 8
Supplementary
Interpretation
5
269
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
10
FISMA 2000 (certain direct insurance undertakings) which has
permission under paragraph 15 of that Schedule (as a result of
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
15
Schedule 1 to the Financial Services and Markets Act 2000 (Regulated
Activities) Order 2001 (S.I. 2001/544).
270
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
20
scheme, is 20.
(2)
But the Inland Revenue and the scheme administrator of any registered
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.
25
271
Valuation assumptions
For the purposes of this Part the valuation assumptions in relation to a person
and any benefits are—
(a)
if the person has not reached such age (if any) as must have been
reached to avoid any reduction in the benefits on account of age, that
30
the person reached that age on the date, and
(b)
that the person’s right to receive the benefits had not been occasioned
by physical or mental impairment.
272
Market value
(1)
For the purposes of this Part the market value of an asset held for the purposes
35
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

Finance Bill
Part 4 — Pension schemes etc
Chapter 8 — Supplementary
227

person, the value of the asset is to be treated as being the amount owing
(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,
5
(b)
any company connected (at the time of the making of the loan or
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
10
subsequently) with any such person.
(4)
Section 839 of ICTA (connected persons) applies for the purposes of this
section.
273
Other definitions
(1)
In this Part—
15

“the Board of Inland Revenue” means the Commissioners of Inland
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
20
Act) but include (respectively) a former employee and a former
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
25
(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
30
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
35
(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
40
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
45
(and any corresponding expression in which two years are
simultaneously mentioned is to be read in the same way).

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Part 4 — Pension schemes etc
Chapter 8 — Supplementary
228

(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.
(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
5
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.
274
Abbreviations and general index
(1)
In this Part—
10

“NIA 1965” means the National Insurance Act 1965 (c. 51) ,

“NIA(NI) 1966” means the National Insurance Act (Northern Ireland)
1966 (c. 6 (N.I.)),

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

“ICTA 1970” means the Income and Corporation Taxes Act 1970 (c. 10),
15

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

“SSCBA 1992” means the Social Security Contributions and Benefits Act
1992 (c. 4),

“SSCB(NI)A 1992” means the Social Security Contributions and Benefits
(Northern Ireland) Act 1992 (c. 7),
20

“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),
25
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—
30

accounting period
section 834(1) of ICTA

active member (of a pension scheme)
section 148(2)

active membership period (in sections
section 217(4) and (5)

217 to 219)

amount crystallised
section 212

35

annual allowance
section 224

annual allowance charge
section 223(1)

annuity protection lump sum death
paragraph 16 of

benefit
Schedule 29

arrangement
section 149(1)

40

authorised surplus payment
section 173

Finance Bill
Part 4 — Pension schemes etc
Chapter 8 — Supplementary
229

available (in relation to a person’s
section 215

lifetime allowance)

basic rate
section 832(1) of ICTA

basic rate limit
section 832(1) of ICTA

benefits (provided by pension scheme)
section 273(2)

5

benefit crystallisation event
section 212

the Board of Inland Revenue
section 273(1)

borrowing (in Chapter 3)
section 160

cash balance arrangement
section 149(3)

cash balance benefits
section 149(5)

10

chargeable gain
section 832(1) of ICTA

charity
section 273(1)

company
section 832(1) of ICTA

compensation payment
section 174

contribution
sections 184(4) to

15

(6) and 191

defined benefits
section 149(7)

defined benefits arrangement
section 149(6)

defined benefits lump sum death
paragraph 13 of

benefit
Schedule 29

20

dependant’s alternatively
paragraph 25 of

secured pension fund
Schedule 28

dependants’ scheme pension
paragraph 16 of

Schedule 28

dependant’s unsecured pension fund
paragraph 22 of

25

Schedule 28

employee and employer (and
section 273(1)

employment)

employment income
section 7(2) of ITEPA

2003

30

enhanced lifetime allowance
section 250(2)

regulations

entitled (in relation to a lump sum)
section 163(2)

entitled (in relation to a pension)
section 162(3)

higher rate
section 832(1) of ICTA

35

Finance Bill
Part 4 — Pension schemes etc
Chapter 8 — Supplementary
230

hybrid arrangement
section 149(8)

ill-health condition
paragraph 1 of

Schedule 28

the individual (in sections 211 to 215)
section 210(5)

the Inland Revenue
section 273(1)

5

insurance company
section 269

investments (in relation to a pension
section 182(3) and (4)

scheme)

liability (in Chapter 3)
section 160

lifetime allowance (in relation to a
section 214

10

person)

lifetime allowance charge
section 210(1)

lifetime allowance enhancement factors
section 214(5)

lifetime allowance excess lump sum
paragraph 11 of

Schedule 29

15

lifetime annuity
paragraph 3 of

Schedule 28

loan (in Chapter 3)
section 159

lump sum death benefit
section 165(2)

market value
section 272

20

member (of a pension scheme)
section 148(1)

member’s alternatively
paragraph 11 of

secured pension fund
Schedule 28

member’s unsecured pension fund
paragraph 8 of

Schedule 28

25

money purchase arrangement
section 149(2)

money purchase benefits
section 149(4)

net pay pension scheme
section 187(9)

normal minimum pension age
section 273(1)

occupational pension scheme
section 147(5)

30

overseas arrangement active
section 220(7) and (8)

membership period (in sections 220 to

222)

payment (in Chapter 3)
section 158

payments (made by pension scheme)
section 273(2)

35

Finance Bill
Part 4 — Pension schemes etc
Chapter 8 — Supplementary
231

pension
section 162(2)

pension commencement lump sum
paragraph 1 of

Schedule 29

pension credit and pension debit
section 273(1)

pension input amount
section 225

5

pension input period
section 234

pension protection lump sum death
paragraph 14 of

benefit
Schedule 29

pension scheme
section 147(1)

the pension scheme (in sections 211 to
section 210(5)

10

215)

pension sharing order or provision
section 273(1)

pensioner member (of a pension
section 148(3)

scheme)

period of account
section 832(1) of ICTA

15

personal representatives
section 273(1)

property investment LLP
section 842B of ICTA

public service pension scheme
section 147(3)

recognised overseas pension scheme
section 147(7)

recognised overseas scheme
section 220(2) and (3)

20

arrangement (in sections 220 to 222)

registered pension scheme
section 147(2)

relevant overseas individual
section 217(3)

relevant UK earnings
section 185(2)

relevant UK individual
section 185

25

relevant valuation factor
section 270

relievable pension contributions
section 184(2) and (3)

retail prices index
section 273(1)

scheme administrator
section 264 (but

see also sections 265 to

30

268)

scheme chargeable payment
section 237

scheme pension
paragraph 2 of

Schedule 28

scheme sanction charge
section 235(1)

35