RPSM04104870 - Technical Pages: Taxation: Unauthorised payments: Scheme sanction charge: Discharge

Discharge from the scheme sanction charge

The scheme administrator may apply to HMRC to discharge their liability to the scheme sanction charge in respect of a scheme chargeable payment on the following grounds

• the scheme chargeable payment is an unauthorised payment under

• • s172 (assignment of benefits),
  • s172A (surrender),
  • s172B (increase in rights of connected person on death),
  • s172BA (increase in rights on death arising from alternatively secured rights)
  • s172C (allocation of unallocated employer contributions), or
  • s172D (limit on increase in benefits), or

• the scheme chargeable payment arises under s181A (minimum level of payment of alternatively secured pension or dependants’ alternatively secured pension), or
• in any other case, the scheme administrator reasonably believed that the unauthorised payment was not a scheme chargeable payment; and
• in all the circumstances of the case it would not be just or reasonable for the scheme administrator to be liable to the scheme sanction charge in respect of the unauthorised payment or, in a case arising under s181A, the scheme chargeable payment.

This ‘good faith’ protection is aimed at the situation where the scheme administrator has been misled or been given incomplete information, by the member or employer (or another party acting for them) leading them to assume wrongly that the payment was an authorised payment.

Scheme administrators should retain documentary evidence of any statement, or information, they have relied on.

The application for discharge of liability to the scheme sanction charge must be made in writing and set out the particulars of the grounds for the discharge of liability. The application must be made within the following time limits.