Pensions Tax Simplification Newsletter No 15
16 June 2006

Contents

1 Introduction

Welcome to the fifteenth edition of the Pensions Tax Simplification Newsletter.

This edition of the Newsletter provides details of the next release in July of Pension Schemes Online. This release will allow amongst other things, the Accounting for Tax return for the first quarter to the end of June 2006, to be filed online.

As always please circulate this newsletter to anyone who you think may find it useful as it helps us to help you, the customer, if messages and guidance are cascaded as quickly as possible to those who might need it.

2 Pension Schemes Online - new functionality available

During the first half of July 2006, the following new functions will be available on Pension Schemes Online. As soon as the new release is available this will be announced on the ‘What’s New’ page of the HMRC website.

  • Submit Accounting for Tax (AFT) return
  • Amend Accounting for Tax (AFT) return
  • Amend Scheme Details
  • Reporting cessation as a Scheme Administrator

Further information on the Accounting for Tax return is provided in item 3 below.

The Amend Scheme Details function will allow Scheme Administrators and authorised Practitioners to make online changes to scheme information, other than those detailed in The Registered Pension Schemes (Provision of Information) Regulations 2006. This is done currently using the paper form APSS 152.

The ability to report the cessation of a Scheme Administrator will be added to the Scheme Administrator Management functionality. Scheme Administrators can use this to notify HMRC online that they have ceased to act as a Scheme Administrator for a particular scheme. This is done currently using the paper form APSS 160.

3 Accounting for Tax Return

The 30th June is the end of the first quarter for ‘accounting for tax purposes’. Scheme Administrators of registered pension schemes who have tax to account for to HMRC must make a return on the Accounting for Tax (AFT) return by 14 August 2006.

It can be submitted either online using Pension Schemes Online or using the paper form (APSS 302). Any tax due will also need to be paid by 14 August 2006.

The AFT return applies to all registered pension schemes and must be submitted within 45 days of the end of each quarter. The first AFT return is due on 14th August 2006. If there is no tax to account for there is nothing to return. Nil returns are not required. For returns filed late or incorrectly, there are penalties set out in Section 260 of Finance Act 2004, and further information can be found in the Registered Pension Schemes Manual RPSM12100020.

The five charges on the AFT are as follows:

  • Short service refund lump sum charge (Section 205 Finance Act 2004 (S205 FA04))
  • Special lump sum death benefits charge (S206 FA04)
  • Authorised surplus payments charge (S207 FA04)
  • Lifetime Allowance charge (S214 FA04)
  • De-registration charge (S242 FA04)

In those cases where funds from a registered pension scheme have been used to purchase, from an insurance company, an annuity or other insurance type contract from which benefits are paid and a special lump sum death benefit payment is made, the insurance company is liable to pay the tax due and submit the AFT return as if they were a Scheme Administrator.

Payment

The following section explains how to obtain a payment reference number, what to do if you have not got one, and how to make a payment of tax to HMRC.

Wherever possible, it is advisable to include a payment reference number when making payment of any tax due. This will ensure the payment is correctly matched to the AFT return and that reminders are not issued for payment unnecessarily.

When an AFT return is submitted successfully online the submitter will receive a success message that includes a payment reference number as well as a submission receipt. Payment can then be made immediately using the payment reference number by means of Direct Payment and BillPay (see below). This will be the quickest and most efficient approach to adopt when making the return and paying the tax. Alternatively a payslip can be requested from APSS if another method of payment is required.

When a paper AFT return is submitted and has been successfully processed, HMRC will acknowledge receipt and provide the Scheme Administrator with a payment reference number and a payslip. The published service standards for Audit & Pension Schemes Services are to turnaround and issue charge references for 91% of all paper AFT’s within 15 working days.

Tax is payable without assessment and is due 45 days after the end of the quarter on the same day as the AFT return is due. So for the first quarter any tax should be paid by 14th August 2006. You should allow enough time for payment to reach HMRC by the due date and we suggest you allow at least 3 working days for this.. As interest is charged on tax paid late it would be preferable when submitting the return by paper, to do so within the first half of the 45 day period to allow sufficient time for HMRC to process the return and send out the acknowledgement and payment reference number. The payment reference can then accompany the payment by the due date.

We recommend the following payment methods as these are the most secure and efficient.

Direct Payment

Use the Internet, telephone, BACS Direct Credit or CHAPS to make payment. You should provide your bank or building society with the following information:

  • payment amount
  • sort code 10-50-41
  • account number 23456000
  • your payment reference.

BillPay

You can pay by Debit Card over the Internet. Visit www.billpayment.co.uk/hmrc and follow the guidance.

At your Bank

If your bank offers this service, take the payslip and payment to your bank branch. Any cheque must be drawn on your bank and made payable to ‘HM REVENUE & CUSTOMS ONLY’. Other banks may refuse to accept payment.

At a Post office

Take the payslip with your payment to any Post Office?. If paying by cheque, make your cheque payable to ‘Post Office Ltd’. The Post Office? also accept payment by debit card.

If you need a payslip, you should contact Audit and Pension Scheme Services on 0115 974 1600.

If you do not know the payment reference number, payment can still be made. In practice, this may mean that the payment is not linked to the AFT return straightaway, and therefore the customer may receive a reminder for outstanding payment, even though payment has been made. In this instance we suggest that you should provide the full name of the scheme and the pension scheme tax reference with the payment.

AFT Amendments

If you become aware of an error in an AFT you should make an amended AFT to APSS for the quarter concerned. This can be done either online using Pension Schemes Online or using the paper form (APSS 302). Do not try to correct a submitted AFT by way of an adjustment in a return for a later quarter.

Error includes:

  • something which ought to have been included in the return for that quarter but had not been included
  • something which ought not to have been included in the return for that quarter but had been including any overpayment of the LTA charge
  • some other error had occurred in the return for that quarter.

Once an AFT return has been made for a quarter and a payment reference number has been generated, that same number will be used for any amendments. On submission of the amended AFT, if there is any additional tax due, this would also be due 45 days after the end of the quarter concerned and interest would run on any tax paid late.

If after submission of the amended AFT return there has been an overpayment of tax, HMRC will repay the amount of the overpayment to the Scheme Administrator. Any repayment carries repayment interest from the later of the due date or the date of payment.

4 Why should I use Pension Schemes Online?

Sending or receiving information online is a convenient and quick way to do business with us. It is more reliable and efficient than using paper, and can cut down on storage space, post and administration. And because information mostly passes between computers without manual intervention, there is less chance of it being misinterpreted, or of mistakes being made.

Key features of our Pension Schemes Online service include:

  • online registration for pension schemes to register for tax relief and other exemptions
  • online completion of forms and returns including the Accounting for Tax return, with the ability to save some partially completed information
  • built-in guidance to help with completion of forms and returns
  • validation of data sent online
  • Scheme Administrators and Practitioners will receive Pension Scheme Notices, reminders and certificates over the Internet but they can also request to receive them on paper as well.

If you want to know more about Pension Schemes Online and the registration process see Introduction to Pension Schemes Online.

Pension Schemes Online – the customer experience

We value your feedback about our Pension Schemes Online service and would like to hear about your experiences and any improvements that you would like to see. Although it is not possible for us to reply to you and immediate changes to the system will not on the whole be possible, our Give us feedback service is a tool for you to express your views. The 'HMRC Customer Feedback Team' will review your comments and if appropriate we will use them to assist in the development of, and enhancements to our online service.

5 Contact Us

If you have any questions about anything to do with new tax rules and you can’t find the answer in the Registered Pension Schemes Manual, please contact our helpline number 0115 974 1600 (9.00 to 17.00 Monday to Friday) or write to us at

Audit & Pension Schemes Services (APSS)
Yorke House
Castle Meadow Road
Nottingham
NG2 1BG