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HMRC sticks to guns on tax position for transfer victims

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17th Apr 2015
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HMRC has told savers who are set to lose some or all of their pension fund in one pension scheme that it will continue to apply penalty taxes.

The FT Adviser reported that that HMRC sent a letter reiterating its position to members of the Capita Oak pension schemes on 7 April, the day after the new pension freedoms came into operation.

The letter reportedly said: “In similar cases HMRC has taken the view that such payments are unauthorised payments from a registered pension scheme that give rise to tax charges under sections 208 and 209 Finance Act 2004.

“It is also possible (although not a given) that if we conclude that this scheme was set-up purely as a vehicle for pensions liberation then the entire member transfer-in (to Capita Oak) could be an unauthorised payment.”

Unauthorised payments are taxed at 55%, plus penalties. The letter said that decisions had been reached on the scheme..

A spokesman for HMRC said: “We don't discuss individual cases. We will take firm action and apply tax charges wherever there is abuse of pension tax relief HMRC must apply the tax legislation fairly to everyone and does not have any discretion to ignore it where tax charges are due That is why it is important that if people want to access their pension savings early they understand there will be tax charges to recover the tax relief previously given.”

Last month, David Gauke, financial secretary to the Treasury ruled out a tax amnesty for members of Ark pension schemes. The pension ‘liberation scheme’ allegedly left people with large tax bills and debts.

In May 2011, The Pensions Regulator was looking at six schemes operated by Ark Business Consulting, as it operated a structure that used loans between pension schemes as a means of ‘unlocking’ pension capital prior to retirement, FT adviser reported.

In 2012, the regulator listed the Ark schemes in a statement warning consumers about pension liberation.

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