Pensions Tax registration
Published 13 September 2017
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Who is likely to be affected
Pension scheme administrators and trustees of existing registered pension schemes and pension schemes.
General description of the measure
This measure extends HM Revenue and Customs (HMRC) powers to refuse to register, and to de-register pension schemes to those which are Master Trusts and don’t have authorisation from the Pensions Regulator under their new authorisation and supervision regime, and to those pension schemes with a dormant company as a sponsoring employer.
Policy objective
The purpose of the measure is to make the HMRC tax registration regime even more effective at preventing fraudulent pension schemes, by aligning with the Pensions Regulator’s new authorisation and supervision regime for Master Trust pension schemes and restricting the registration of pension schemes with a dormant company as a sponsoring employer. The measure supports the government’s objective of fairness in the tax system by maintaining the integrity of pensions tax relief. The changes will help HMRC to restrict tax registration to those pension schemes providing legitimate pension benefits.
Background to the measure
The Master Trust tax registration measure was announced at Spring Budget 2017. The changes to the registration of pension schemes with a dormant company as a sponsoring employer was set out in the response to the consultation on pension scams published on 20 August 2017.
Detailed proposal
Operative date
The measure will have effect from 6 April 2018.
Current law
The Pensions Tax rules for registered pension schemes are set out in Part 4 of Finance Act 2004.
Registrations and de-registrations
In order for a pension scheme to be registered with HMRC, it must provide any information which HMRC reasonably requires. This information is requested in the application for registration. HMRC can also issue an information notice (Section 153A of Finance Act 2004) to request further information. HMRC must register the scheme unless the application contains incorrect information, a false declaration or the scheme administrator is not a fit and proper person (Section 153 of Finance Act 2004).
HMRC may only withdraw registration from a pension scheme in limited circumstances, which are set out in statute (Section 158 of Finance Act 2004).
Proposed revisions
Registrations and de-registrations
Legislation will be introduced in Winter Finance Bill 2017 amending Finance Act 2004 to widen the circumstances in which HMRC may refuse to register a pension scheme to include where the scheme is a Master Trust pension scheme and has not been authorised by the Pensions Regulator, or where a sponsoring employer of an occupational pension scheme is a dormant company.
Changes will also be made to the circumstances when HMRC can de-register a pension scheme, similar to those changes being made to the circumstances when HMRC can refuse to register a pension scheme.
Summary of impacts
Exchequer impact (£m)
| 2017 to 2018 | 2018 to 2019 | 2019 to 2020 | 2020 to 2021 | 2021 to 2022 |
|---|---|---|---|---|
| - | nil | nil | nil | nil |
This measure is not expected to have an Exchequer impact.
Economic impact
This measure is not expected to have any economic impacts.
Impact on individuals, households and families
This change will bring about added protection for individuals by reducing the number of fraudulent pension schemes being registered with HMRC.
The measure is not expected to impact on family formation, stability or breakdown.
Equalities impacts
The proposed change will bring about added protection for individuals who will be represented in groups sharing protected characteristics.
Impact on business including civil society organisations
This measure is expected to have a negligible impact on pension scheme administrators’ administrative burdens. One off costs will include familiarisation with the new registration questions.
In addition, there are new requirements imposed by the Pensions Regulator’s new authorisation and supervision regime that are expected to result in additional cost/burdens for pension scheme administrators.
Operational impact (£m) (HMRC or other)
HMRC will incur additional costs in implementing this change. Strategic changes to IT systems are likely to follow and will be detailed elsewhere.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
The measure will be kept under review through communication with affected taxpayer groups.
Further advice
If you have any questions about this change, contact:
Samantha Skill
Email: pensions.policy@hmrc.gsi.gov.uk
Telephone: 03000 512336
Declaration
Stephen Barclay MP, Economic Secretary to the Treasury, has read this tax information and impact note and is satisfied that, given the available evidence, it represents a reasonable view of the likely costs, benefits and impacts of the measure.