(This archived guidance relates to HMRC discretionary
practice before the 6th April 2006. For current guidance on
Registered Pension Schemes see the Registered Pension Schemes
Manual)
Section 601 ICTA 1988 imposes a liability to tax on payments
received by an employer from an exempt approved scheme or a scheme
which has at any time been an exempt approved scheme (see
PSI19.1.16(g)(iii)).
[PN17.34]
In the main such payments are charged to tax at the rate of
35% under section 601(2). Where this is the case the tax is not
capable of being reduced or offset by reference to the
employer’s position in respect of other tax. So for example
trading losses cannot be set-off against the liability. In most
cases, however, no payment will be necessary by the employer as the
tax deducted from monies passed back to the employer (see
PSI20.7.4) will cover the
liability. If, on the other hand tax is not paid to the Inland
Revenue by the scheme administrator, it will be collected from the
employer as will interest charged for tax paid late. A section
601(2) liability will most commonly arise where a surplus in a
scheme is refunded to an employer. More detailed guidance on this
can be found in Part 20 Sections 6 to 9.
