PensionsAug 29 2014

Capita in Arch Cru redress payment mistake

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Capita SIP Services has written to self-invested personal pension clients invested in Arch Cru funds via Scottish Equitable, telling them it paid them their redress money in a way that exposed them to a 40 per cent higher rate tax charge, after breaching pension scheme rules.

Capita asked the clients to send back payments from the £54m Financial Conduct Authority consumer redress scheme, or face paying the tax charge.

The letter read: “When we originally wrote to you we should not have given you the option to receive the redress money as a cash withdrawal from your pension plan.

“Unfortunately making a payment in this way does not comply with current HMRC regulations and is an unauthorised payment.”

This means investors must send the lump sum back to be put in their pensions, or forfeit a piece of their payout.

Capita’s administration arm responded in a statement that, with the agreement of Scottish Equitable, it wrote to eight individuals that received Arch Cru payment schemes as direct payments, instead of into their pensions, to advise them that this will attract tax at the higher rate of 40 per cent.

“The letters make it clear that the monies need to be returned to individual investors’ pensions, which do not attract tax.”