Pensions Tax Simplification Newsletter 34

24 July 2008

Contents

Introduction

Welcome to the last Pensions Tax Simplification Newsletter. We will still be telling you about the changes that affect the taxation of pensions but we have decided to change the title. From now on you will be able to find changes in ‘Pensions Schemes Services Newsletter’

Code of Practice 10 - Guidance and support from HMRC Pension Schemes Services

The deadline in Code of Practice 10

In Newsletter 29 published in August 2007 we explained about the previous four Finance Acts rule in Code of Practice 10 and confirmed that we would continue to apply that rule for at least one more year. This article explains what we will do from now on and sets out the range of ways that you can get guidance and support from HMRC on pensions tax.

If you are uncertain about our interpretation of the law, or the application of the law to a particular transaction, Code of Practice 10 says that we will answer questions about the application of legislation in the last four Finance Acts. You need to provide us with the information listed in Appendix 1 of the Code of Practice.

The bulk of pensions tax legislation is in Finance Act 2004 and so the time limit would have expired with the passage of Finance Act 2007. However, the Finance Act 2004 pensions tax legislation did not come into force until 2006. So, last year, we extended the deadline for that legislation by one year and agreed to reconsider the deadline in 2008.

We have now decided to extend the deadline for that legislation for two more years. The deadline for Code of Practice 10 enquiries relating to pensions legislation in Finance Act 2004 will expire when Finance Bill 2010 receives Royal Assent. The deadline for enquiries relating to pensions legislation in the 2005 Finance Acts and Finance Act 2006 will also expire at that time. The usual Code of Practice 10 deadline will apply in relation to pensions tax legislation in later Finance Acts.

What guidance and support is available?

HMRC remains committed to providing guidance and support to pension schemes and their advisers. The Registered Pension Schemes Manual (RPSM) will remain an up-to-date guide to pensions tax legislation. During 2008 and 2009 we will be publishing more guidance in RPSM and will be working to improve the quality and range of guidance available.

RPSM aims to provide guidance to deal with the most common questions about pensions taxation and provides comprehensive guidance on the tax legislation. You should be able to find the answer to almost all of your questions by looking at RPSM.

Where RPSM does not have an answer you can contact Pension Schemes Services by using our helpline telephone number (Tel 0845 600 2622) or by using our dedicated email service. Please remember that neither the telephone helpline nor the email service are suitable for complex questions of tax law, or for questions in which the facts and circumstances may be complicated or may need access to supporting documents to understand.

For more complex questions you can use the procedure in Code of Practice 10 by writing to Pension Schemes Services. HMRC has also set up a new clearance procedure for businesses where there is material uncertainty around the tax outcomes of a real issue of commercial significance to the business itself.

HMRC will keep the nature and level of the support it provides to the pensions industry under review and will continue to listen to representative bodies and other customers to ensure we provide the best support that can realistically be achieved.

Scheme sanction charge/unauthorised payment

We have been asked about the practical application of the legislation for raising the scheme sanction charge and obtaining a deduction against that charge for the tax paid by the member on the unauthorised payments made to them. This has become an issue for scheme administrators since 31 January 2008 when the Event Reports for the first year became due. Before raising any scheme sanction charges on the scheme administrator we are going to carry out a review to look at the process and the practical issues around obtaining the deduction. We are hoping to complete our review by the end of the summer and to notify you of the outcome soon after that.

This review does not change your legal obligation to report unauthorised payments on the Event Report. If you have any questions you can contact Craig Watts on Tel 0845 600 2622.

Registering a new Death in Service/Group Life Assurance Scheme

We have received a number of queries from the Scheme Administrators of occupational schemes that provide death in service benefits for employees through one or more group life assurance policies asking how they should be registered on Pension Schemes Online. These are schemes that do not provide a pension benefit upon retirement but simply provide death in service cover for employees.

A Death in Service/Group Life Assurance Scheme should be registered for tax relief on Pension Schemes Online as an occupational scheme in the normal way. When selecting the legal structure of the scheme select ‘Other’ and provide a description of the scheme for example ‘Provides death in service cover only’.

For further information please see, a Guide to Using the Online Service for Scheme Administrators (PDF 216K).

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 email or phone our helpline number on Tel 0845 600 2622 (9.00 am to 5.00 pm Monday to Friday) or you can write to us at:

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