RegulationJul 21 2014

HMRC refuses 8% of pension registrations

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HM Revenue and Customs has refused to register 8 per cent of pension schemes since it ditched its “process now, check later” approach and is implementing a system of risk assessment prior to registering a scheme.

In October last year, the revenue responded to calls from the industry to tighten its pension scheme registration to limit potential for liberation fraud.

The revised approach, which was effective from 21 October, meant occupational pension schemes were no longer registered immediately upon receipt of a completed form.

HMRC said now conducts a “detailed risk assessment” of activity before making a decision on whether or not to register a scheme.

After 21 October 2013, HMRC received only 4,530 applications to register new pension schemes. Some 88 per cent of these schemes have been registered and HMRC have currently refused registration for about 8 per cent of applications. No decision has yet been made on the remainder, HMRC said.

An HMRC spokesperson told FTAdviser: “The changes to our process are part of a government-wide initiative involving HMRC and other agencies aiming to detect, disrupt and deter promoters of pension liberation schemes and to ensure that individuals are aware of the true tax position.

“The vast majority of pension funds abide by their legal obligations, but we won’t hesitate to de-register a pension scheme where rules are not adhered to.

“We will apply and enforce all tax charges against both the promoters of pension liberation schemes and pension savers.”

In total, for 2012/13, HMRC received and registered 15,140 schemes. For 2013/14, HMRC received in total 15,714 applications to register pension schemes. From 6 April 2013 to 21 October 2013, HMRC received and registered 11,184 schemes.

All new applications to register a pension scheme are reviewed to enable HMRC to make a decision on whether the scheme meets the conditions to be a registered pension scheme and can therefore be registered.

The length of time this process can take will vary, but may take longer where HMRC is conducting enquiries.