PSI19Appendix1 - Withdrawal of Approval: Occupational Pension Schemes Withdrawal Of Tax Approval

(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)

No occupational pension scheme will face loss of approval if the trustees act in accordance with the scheme’s trust deed and rules and their statutory obligations. Where, however, withdrawal is warranted the circumstances of each case determine the precise action of the PSO. In all cases advance notice is given, and the opportunity and assistance are provided to rectify the matter. The tax consequences of withdrawal are made clear at an early stage. As a general approach the following steps would normally be taken in straightforward cases. In every instance the final decision to withdraw approval is taken only after consideration at a senior level.

Once a transgression of the rules is identified, the PSO will contact the practitioner acting for the scheme by letter to seek an explanation and to provide an opportunity for matters to be put right.
After a reasonable period (not less than 1 month), if the practitioner does not reply, the PSO will write to both the practitioner and the scheme trustees pointing out that the scheme’s approval is in jeopardy and explaining the tax consequences of loss of approval.		Where the practitioner or trustees respond and the scheme is willing to rectify the position, correspondence will ensue on the means of putting things right. Approval of the scheme is not then withdrawn.
After a further month, a formal warning is issued to both the practitioner and the trustees that approval will be withdrawn in 30 days if no satisfactory response is received.		If the scheme does not rectify the position the PSO will give further warnings that approval is in jeopardy and of the tax consequences of withdrawal.
After 30 days approval is withdrawn and the practitioner and trustees notified.