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HMRC internal manual

Company Taxation Manual

Corporation Tax: management expenses: pension contributions: pension regulator

The Pensions Regulator was established by the Pensions Act 2004 (PA04). Its statutory objectives include protecting members’ benefits and reducing calls on the Pension Protection Fund (see CTM08351). It will try to ensure that employers meet their obligations to members.

Where an undertaking to provide a pension has been given to employees as part of their remuneration package, then contributions are made in respect of the investment business and this is not affected by the fact that any actual payment is crystallised as a result of a direction issued by the Pensions Regulator.

The Pensions Regulator will also act as a referee to negotiations between the trustees and employer(s) where an application for clearance to a transaction has been made.

Where the Pensions Regulator requires a company to make a payment under S75 Pensions Act 1995 then see CTM08354.

The Pensions Regulator can also require (PA04/S38-42) an employer or person connected with the employer to make a payment into the scheme or to the Pension Protection Fund to make good any under-funding if the Pensions Regulator considers that there have been attempts to avoid paying a S75 debt.

Such contributions will be subject to the normal principles as outlined in CTM08344 and CTM08353 where made by an ‘employer’.

If the payment is not made by an employer (within the extended meaning of that term, CTM08342) so that S199/FA04 does not apply, but it was paid for the purpose of managing the paying company’s investment business then relief may be available as an expense of management under first principles. However where the payment relates to another company’s liability, or is otherwise not for the purpose of managing its own investment business, relief may not be due. The underlying purpose for the payment should be examined in detail to establish whether relief will or will not be due.

Where the investment business of an employer making the payment has ceased, then the payment, if it is allowable, will be treated as paid on the last day of the business and allowed accordingly.