RPSM12101020 - Technical Pages: Information Requirements and Administration: Genuine errors: ‘Payments’ that are not unauthorised payments

Genuine errors: ‘Payments’ that are not unauthorised payments

To protect the integrity of the tax reliefs and exemptions given to registered pension schemes, the tax rules distinguish between authorised payments and unauthorised payments when a payment is made from a registered pension scheme to, or in respect of, a person who is, or was, a member of the scheme and, also, in the case of a registered pension scheme that is an occupational pension scheme, to, or in respect of, a person who is, or was, a sponsoring employer.

However, an inadvertent payment made in the following circumstances will not be an unauthorised payment:

• the payment is made in genuine error, such that there was no intention to make a payment to that extent or at all, and
• the erroneous payment is spotted by someone involved with the management of the scheme (or the recipient of the payment or the recipient’s adviser might have brought the matter to the attention of the scheme managers), and
• the error is rectified as soon as reasonably possible.

There is no requirement for the scheme administrator to report a payment made in these circumstances as an unauthorised payment (see RPSM12301030), as the payment is not an unauthorised payment for the purpose of the tax rules relating to registered pension schemes.