RPSM12101042 - Technical Pages: Information requirements and administration: Genuine errors: Inadvertent unauthorised payments: Pension instalments and lump sums exceeding £250 in total that are unauthorised payments and discharge from scheme sanction charge

Inadvertent unauthorised payments: pension instalments and lump sums exceeding £250 in total that are unauthorised payments and discharge from scheme sanction charge

Due to a genuine error, a lump sum or a pension, or an instalment of a pension, could be paid under a registered pension scheme inadvertently and in circumstances where the payment means that an unauthorised member payment has occurred. A pension could include a scheme pension or a lifetime annuity.

If the error was spotted and rectified (the inadvertent payment was repaid) as soon as reasonably possible, the inadvertent payment would not be an unauthorised member payment (see RPSM12101020).

However, there could be an unauthorised member payment if, despite the error being spotted, it is decided repayment of the inadvertent payment, or payments, will not be pursued or will be written off after initial attempts to seek recovery (seeRPSM12101040).

When there is an unauthorised member payment under a registered pension scheme, usually, the scheme administrator of the pension scheme is liable to a scheme sanction charge in respect of that payment (see RPSM04104810).

However, scheme administrators are able to apply to HMRC to ask it to discharge their liability in respect of a scheme sanction charge. Such an application can be made where the scheme administrator considers that the grounds for such a discharge are just and reasonable. The scheme administrator must set out those grounds as part of the application (see RPSM04104870).

Whilst each application would have to be considered on its merits, HMRC is likely to accept that scheme administrators would have grounds for a discharge from the scheme sanction charge where the inadvertent payments were made in genuine error.

Such an application for discharge from the scheme sanction charge would not be required where

• the inadvertent payment made in genuine error, that is an unauthorised member payment, is not pursued upon spotting the error or, otherwise, not successfully pursued and
• the payment to, or in respect of, a particular member does not exceed £250 as set out in RPSM12101040.

HM Revenue and Customs does not require that payment to be reported as an unauthorised member payment.