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HMRC internal manual

Pensions Tax Manual

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Protection from the lifetime allowance charge: late submission of notifications for protection from the lifetime allowance charge

Glossary PTM000001
   

 

Overview
Enhanced and primary protections
Fixed protection (FP 2012), fixed protection 2014 (FP 2014) and individual protection2014 (IP 2014)
Appeals against late notifications
Discretionary powers

Overview

The criteria to be considered in respect of whether or not HMRC may accept a late notification for protection from the lifetime allowance charge is different depending on the type of protection being applied for.  This guidance applies to a late notification of intention to rely on:

As there is no deadline for making an application for both fixed protection 2016 and individual protection 2016 this guidance does not cover these types of protection

In all cases where a notification is given after the relevant deadline, no decision should be made by HMRC without ensuring that HMRC has:

  • been provided with all relevant evidence for consideration
  • received confirmation that the person has checked the provisions and is satisfied that, should their application be accepted, they are still entitled to the form of protection they are applying for.

Where HMRC refuses to accept a late notification, and the individual appeals, HMRC will need to establish that protection hasn’t been lost before the matter is heard by the Tribunal.

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Enhanced and primary protections {#}

Regulation 12 The Registered Pension Schemes (Enhanced Lifetime Allowance) Regulations 2006 - SI 2006/131

A notification for primary or enhanced protection of benefits built up before 6 April 2006 can only be given after 5 April 2009 where the individual:

  • has a reasonable excuse for not giving their notification to HMRC on or before 5 April 2009, and
  • gives the notification to HMRC without unreasonable delay after the reasonable excuse ceases to apply.

If HMRC is satisfied that both these conditions have been met they will issue a certificate showing the individual’s entitlement.

If HMRC is not satisfied that both conditions have been met they will refuse to issue a certificate.

Further guidance on what may be accepted as a reasonable excuse can be found at

https://www.gov.uk/tax-appeals/reasonable-excuses

If the individual is not satisfied with HMRC’s decision, they can appeal to the Tribunal. Further guidance on how to make an appeal can be found at

https://www.gov.uk/tax-appeals

When making an appeal on grounds of reasonable excuse, full details of the facts and circumstances to be taken into account must be provided to HMRC. The information and supporting evidence needs to demonstrate:

  • why there is a reasonable excuse for not giving the notification on or before 5 April 2009
  • that the notification has been given without unreasonable delay after the reasonable excuse has ceased.

Before making a late notification the person must ensure they still meet the criteria for protection and consideration should be given to whether any actions have been taken that mean that the form of protection will have been lost. Primary protection can only be lost (or reduced) if the person’s rights are reduced as a result of a pension debit following a pension sharing order on divorce. Enhanced protection can be lost in a number of circumstances:

For example:

  • setting up a new arrangement, other than those permitted, or
  • having relevant benefit accrual (see PTM093500)

Further details on events which trigger loss of protection can be found in PTM090000 for each of the protections.

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Fixed protection (FP 2012), fixed protection 2014 (FP 2014) and individual protection2014 (IP 2014) {#}

Fixed protection (FP 2012)

The Registered Pension Schemes (Lifetime Allowance Transitional Protection) Regulations 2011 - SI 2011/1752)

A notification for FP 2012 must have been received by HMRC on or before 5 April 2012

There are no reasonable excuse provisions allowing HMRC to accept a late notification received after 5 April 2012.

Fixed protection 2014 (FP 2014)

The Registered Pension Schemes and Relieved Non-UK pensions schemes (Lifetime Allowance Transitional Protection)(Notification) Regulations 2013 - SI 2013/1741

A notification for FP 2014 must have been received by HMRC on or before 5 April 2014.

There are no reasonable excuse provisions allowing HMRC to accept a late notification received after 5 April 2014.

Individual protection 2014 (IP 2014)

Paragraph 1(1) of Schedule 6 Finance Act 2014

The Registered Pension Schemes and Relieved Non-UK Pension Schemes (Lifetime Allowance Transitional Protection)(Individual Protection 2014 Notification) Regulations 2014 - SI 2014/1842

An individual can give notice of their intention to rely on IP 2014 from August 2014. HMRC must receive the notification before 6 April 2017. If HMRC accepts the notification the protection is effective from 6 April 2014.

There are no reasonable excuse provisions allowing HMRC to accept a late notification received after 5 April 2017.

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Appeals against late notifications

There are regulations covering the appeal provisions for FP 2012, FP 2014 and IP 2014. These are set out in:

FP 2012 - Regulations 4 to7 The Registered Pension Schemes (Lifetime Allowance Transitional Protection) Regulations 2011 -SI 2011/1752

FP 2014 - Regulations 4 to 7 The Registered Pension Schemes and Relieved Non-UK pensions schemes (Lifetime Allowance Transitional Protections)(Notification) Regulations 2013 - SI 2013/1741

IP 2014 - Regulations 4 to 7 The Registered Pension Schemes and Relieved Non-UK Pension Schemes (Lifetime Allowance Transitional Protection)(Individual Protection 2014 Notification) Regulations 2014 - SI2014/1842

The regulations for FP 2012, FP 2014 and IP 2014 set out the requirements that need to be met to enable HMRC to accept a notification for FP 2012, FP 2014 or IP 2014.  For FP 2012 and FP 2014 one of the requirements is that the notification must be received by HMRC on or before the deadlines set out in the relevant regulations.  An individual can appeal against a refusal by HMRC to accept the notification for FP 2012 and FP 2014 on the grounds that HMRC was not entitled to take the view that the notice did not meet the requirements as it was received after the deadline. Where an appeal is made, the tribunal is required to determine whether or not HMRC were entitled to take the view that the notification wasn’t received by the relevant deadline.

An example of this could be where an individual sent a notification for FP 2012 but HMRC received it after 6 April 2012. If HMRC have taken the view not to accept the late notification as they consider it out of time, the individual can appeal about whether HMRC was correct to consider that the notification was received after the deadline and therefore it did not meet the conditions set out in the legislation.

For IP 2014 there is no provision in the IP 2014 notfication regulations for any appeal right to the Tribunal against a refusal by HMRC to accept a late IP 2014 notification as the deadline for notification is contained in primary legislation in Schedule 6 of Finance Act 2014.  Paragraph 1(1) Schedule 6 provides that intention to reply on IP 2014 must be given to an officer of Revenue and Customs before 6 April 2017.  So if an application is not received by that date there is no Paragraph 1 notice for the purposes of the IP 2014 notification regulations.  And the primary legislation makes no provision for an individual to appeal against a decision by HMRC not to issue an IP 2014 certificate because they were not notified by the deadline.

Further guidance on how to make an appeal can be found at https://www.gov.uk/tax-appeals.

Discretionary powers {#}

FP 2012 - Regulation 6 The Registered Pension Schemes (Lifetime Allowance Transitional Protection) Regulations 2011 - SI 2011/1752

FP 2014 - Regulation 6 The Registered Pension Schemes and Relieved Non-UK Pensions Schemes (Lifetime Allowance Transitional Protection) (Notification) Regulations 2013 - SI 2013/1741

IP 2014 - Section 5(1) The Commissioners for Revenue and Customs Act 2005

There are no reasonable excuse provisions within the legislation for FP 2012, FP 2014 and IP 2014 which would allow HMRC to accept a late notification. HMRC can, however, in exceptional circumstances, accept a late notification by exercising its discretion under the above regulations in relation to FP 2012 and FP 2014 and under collection and management provisions set out in Section 5(1) of the Commissioners for Revenue and Customs Act 2005 in relation to IP 2014 (there being no discretionary power to accept late notifications in the IP 2014 notification regulations).

Before giving a late notification the person must ensure they still meet the criteria for protection and consideration should be given to whether any actions have been taken that mean that the form of protection will have been lost. In the case of IP 2014, the protection can only be lost (or reduced) if a person’s pension rights are reduced below the individual’s personal lifetime allowance as a result of a pension debit applied following a pension sharing order on divorce. FP 2012 and FP 2014 can be lost in a number of circumstances.

For example:

  • setting up a new arrangement, other than those permitted, or
  • having benefit accrual (see PTM093500).

Further details on events which trigger loss of protection can be found in chapter 9 of the PTM for each of the protections.