HM Revenue & Customs (HMRC) has U-turned on a requirement that small self-administered scheme (Ssas) providers said was leaving them swamped with additional work.
Last year, the taxman introduced the Trust Registration Service (TRS) to comply with the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017.
This meant pension scheme providers that incurred in a UK tax liability had to register through the new service.
According to Gareth James, head of technical resources at AJ Bell, this created a “double whammy of rules", since Ssas are already registered through the taxman’s online system, effectively meaning providers had to register them twice.
Mr James explained the new requirement meant providers had to give details of individual trustees and beneficiaries, which was quite challenging.
He said: “You have Ssas administrators having to register hundreds and hundreds of different pension schemes with this online system.
“It also applies to [self-invested personal pension] Sipp schemes when they are trust based - which was a complicated situation because they have a structure of a single master trust, with sub-trusts underneath it, so some of them have hundred thousand beneficiaries, or trustees even, making it quite challenging to use a system that has been designed for small non-pension scheme trusts.”
With a deadline to register all new schemes until 5 March, AJ Bell had “a fair amount of additional work” due to the new system.
Mr James said: “We had to register several hundred ssas, and after that, that generated a request from HMRC to complete tax returns for those schemes, which again isn't needed, because we provide this information through the pension schemes online service.
“So, we had to contact HMRC again regarding each one of those tax returns to say that it's not relevant to our schemes.”
But in its May pension scheme newsletter, published yesterday (3 May) the taxman announced the requirement to comply with the new registration service is being dropped for Ssas providers.
It said: “As we know some pension scheme trustees have had difficulty using TRS we have changed the guidance. This means that now if your registered pension scheme is a trust, your scheme trustees don’t need to register separately on TRS.”
Martin Tilley, director of technical services at Dentons, has also welcomed the taxman U-turn.
However, he told FTAdviser that HMRC new guidance on this matter isn’t quite as clear as he would like.
The taxman said, in a guidance document, that if the pension scheme administrator or manager incurs a liability to any of the relevant UK taxes in a tax year, then they must register on TRS.
However, immediately after this, the document stated that registered pension schemes do not have to use TRS but they must keep the required information in their own records and provide it when asked.
Mr Tilley said: “We look forward to the promised further guidance on gov.uk and later newsletters.”