RPSM04104070 - Technical Pages: Taxation: Unauthorised payments: Overview: Payments to connected persons

Payments to connected parties

A payment can be made to a person who is not a member, former member, sponsoring employer or former sponsoring employer but still be treated for tax purposes as a payment to a member, former member sponsoring employer or former sponsoring employer, as the case may be. This will happen if the person receiving the payment is connected with

• a member, or
• a former member, or
• a sponsoring employer, or
• a former sponsoring employer, or
• was connected with a member or former member on the date of the death of the member or former member.

In this case the payment will be treated as made to either the member, the former member, the sponsoring employer, or the former sponsoring employer to whom the person receiving the payment was connected.

Where a scheme enters into a transaction that increases the value of an asset, or decreases the amount of a liability, of a person connected with

• a member, or
• a former member, or
• a sponsoring employer, or
• a former sponsoring employer, or
• was connected with a member, or former member on the date of the death of the member or former member.

the increase in the value of the asset, or decrease in liability will be treated as for the benefit of the member, the former member, the sponsoring employer, or the former sponsoring employer (as the case may be).

RPSM04104080 sets out what is meant by a connected person.