| [s179, sch30] |
Where a loan ceases to be secured by any charge at all at any
time after the loan is made, an unauthorised payments charge will
arise calculated on the amount owing (including interest).
Where no security exists or the asset is not secured as a
first charge, the unauthorised payment will be the amount of the
loan (including interest).
Where a
sponsoring employer, or person connected with the
sponsoring employer undertakes a transaction which reduces the
value of the security, an unauthorised payments charge will apply
on the amount of reduction in the charge.
If the replacement security is not equal to either the value
of the previous security or the amount of the loan still
outstanding, an unauthorised payments charge will apply. The charge
will be the reduction in value of the charge.
QQ Ltd registered pension scheme makes a loan to QQ Ltd of £250,000. QQ Ltd offers a property as security that has a value of £300,000.
Six months later QQ sell the property and replace the security with another property worth £200,000. The amount of loan outstanding including interest is £230,000.
An unauthorised payments charge will arise on the difference between the value of the security and the amount of the loan outstanding - £30,000 at the rate of 40% resulting in a tax charge of £12,000.
| Glossary ( RPSM20000000) |
