Pensions Tax Simplification Newsletter No 24

31 January 2007

Contents

1. Introduction

Welcome to the twenty fourth edition of the Newsletter.

Please pass this Newsletter on to anyone else in your organisation who you think may find it useful.

2. Employers: The tax and National Insurance treatment of employer cash inducement payments to pension scheme members

HMRC published on the 22 January 2007 an announcement on the tax and National Insurance position of employer cash inducement payments to pension scheme members.

Attached to this Newsletter is new draft internal HMRC guidance (PDF 38K) for this. This guidance will be incorporated within Employers Income Manual (EIM) in due course.

3. Relief on contributions to a US pension scheme under the UK/USA double taxation treaty - procedural guidance note

Members of US pension schemes who come to work in the UK can claim relief under the UK/USA double taxation convention on contributions that they and their employer have made if certain conditions are met. The attached note (PDF 48K) provides some guidance on the procedures for claiming such relief on contributions made in 2006/07. It explains that relief is given on the same basis as on contributions to a UK tax-recognised pension scheme so the way in which relief is calculated has changed as a consequence of pensions tax simplification.

It is intended to include in chapter 13 of the Registered Pension Schemes Manual some general guidance on pension contributions relief under double taxation treaties

4. New processes for April 2007

On 5 April 2007, the first full year of pension simplification will come to an end and various new requirements will come into effect.

Register a new pension scheme

There will be a few changes to the questions included in the process to register a new pension scheme. The question about the legal structure of the scheme has been simplified and there are new questions about the country of establishment and whether the scheme is an occupational pension scheme and/or an investment-regulated scheme.

The online process will change in April 2007 to reflect the new questions and a new paper form APSS100 will be available, probably on 2 April 2007. You should not submit any paper forms APSS100 Version 03/06 any later than 3 April 2007 as we will be unable to process these. We will provide further information about using the old version of the paper and the online form nearer the time.

Event Report

The Scheme Administrator of all registered pension schemes must submit an Event Report where there have been any events during the 2006-2007 tax year that must be reported by virtue of The Registered Pension Schemes (Provision of Information) Regulations 2006. These events include changes to the scheme or its membership numbers and certain movements of scheme funds. The Event Report must be filed after the end of the tax year but before 31 January 2008 unless the scheme completed a winding up during the tax year when an Event Report must be made within 3 months of the winding up.

The online functionality to compile and submit an Event Report for 2006-2007 will be available in April 2007 and a new paper form APSS300 will be published probably on 2 April 2007. The new version of the form should be used for all Event Reports that have to be made for the full tax year to 6 April 2007. You should not submit any paper forms APSS300 Version 03/06 (for schemes that wound up in 2006-2007) any later than 3 April 2007 as we will be unable to process these.

The online functionality to compile an Event Report 'in year' will also be available in April 2007. By compiling the Report online, you will be able to save information throughout the year and share that information with Scheme Administrators and authorised Practitioners. However, these Reports may not be submitted before the end of the relevant tax year.

Notices for Pension Scheme Returns

A Pension Scheme Return (PSR) is required for a registered pension scheme if a notice to make a Return has been issued by HMRC. A notice to make a Return for the tax year 2006-2007 will be issued to those selected schemes in the first few weeks after 6 April 2007 and the PSR will have to be filed usually by 31 January 2008. There are different time limits if a notice is issued later in the year or if the scheme winds up.

Notices will be issued mostly to small occupational schemes (50 members or less) and to non-occupational schemes that are investment regulated (generally SIPP type schemes).

The vast majority of notices will relate to a tax year. If the scheme prepares audited accounts, the Return must be made for the period of account ending in the tax year.

Online functionality to file a PSR will be available in April 2007. Two paper forms APSS301 and APSS313 for occupational schemes and non-occupational schemes respectively, will be available on 6 April 2007. A draft version of each form as well as updated completion notes are currently available on our website so that you can familiarise yourself with the type of information required.

Notices for audited accounts

Larger occupational pension schemes that do not receive a notice to make a Pension Scheme Return may instead receive a notice to produce audited accounts. These notices will be issued in the first few weeks after 6 April 2007 under the provisions of section 252 FA 2004. The time limit for submission will be the later of 35 days from the date of the notice or 7 months from the end of the period of account.

Notices that are issued for the tax year 2006-2007 will require a Scheme Administrator to provide audited accounts for all accounting periods that end in the tax year. You may therefore need to send in one or more than one set of accounts in response to the notice. If a Scheme Administrator receives a notice but the pension scheme does not prepare audited accounts, whether exempted from doing so by DWP regulations or for any other reason, or there is no accounting period that ends in the tax year, you should advise us as soon as possible after receiving the notice. We can then update our records and avoid issuing unnecessary penalty determinations.

5. Registered Pension Schemes Manual

Recent changes to the Registered Pension Schemes Manual

We have today published an update to the Registered Pension Schemes Manual (RPSM). It now gives further clarification to Newsletter 19 item 2, interest paid with lump sums from registered pension schemes and Newsletter 21 item 4, the meaning of the term 'single transaction' for a 'block transfers.

Full details of all the amendments can be found on the 'Recent changes to this manual page' of RPSM.

Notification of Updates

The HMRC Internet page describes how to get updated by the All Manuals RSS newsfeed. RSS stands for Really Simple Syndication; this facility enables you to have the latest news and new web content delivered directly to your email box. Instead of having to go to a website to find a new article or feature, you can use an RSS to tell you.

To obtain this facility you will need to get a feed reader and subscribe - there are a number of different feed readers available on the Internet and many of them are free. To find out more about RSS and how to get started please go to manuals in the Practitioner Zone.

6. 1SF - Get Up To Date

Although the new quarterly Accounting For Tax returns should now be being submitted, you are still able to clear any outstanding 1SF's by contacting Luke Saxton on 0115 974 1665 or by posting them to CAR Audit, Yorke House, Castle Meadow Road, Nottingham, NG2 1BG.

7. 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 us by e-mail or phone our helpline number 0115 974 1600 (9.00 to 17.00 Monday to Friday) or you can write to us at

Pension Schemes Services (PSS)
Yorke House
Castle Meadow Road
Nottingham
NG2 1BG