HM Revenue & Customs has been given power to refuse to register a pension scheme if it believes it will be used as a liberation vehicle.
Legislation will be introduced in Finance Bill 2014 to widen the circumstances in which HMRC may refuse to register a pension scheme if their tax officers believe the scheme administrator is not a fit and proper person to fulfil that role.
In a five-page document published alongside the Budget, the tax officers are also given power to reject a scheme if their investigations suspect it was set up “for purposes other than of providing pension benefits.”
New penalties for false information of up to £3,000 will also be introduced in connection with the registration application in a bid to deter pensions liberators.
Similar changes to the circumstances when HMRC can refuse to register a pension scheme will be made to the rules for when HMRC can de-register a pension scheme.
According to HMRC, the rule changes will save individuals the loss of most of their pension savings through tax charges and fees to promoters, “as we hope to protect the innocent from engaging in pension liberation activity.”
The new powers for HMRC come just days after the tax office was forced to admit tactics used by pension liberators were within tax law and that concerns about these schemes were better addressed to the FCA and PRA.
