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HMRC internal manual

Pensions Tax Manual

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Unauthorised payments: the unauthorised payments charge and the unauthorised payments surcharge: who is liable?

Glossary PTM000001
   

Who is liable to the charges on unauthorised payments
Relief from members liability when orders made by court or the Pensions Regulator

Who is liable to the charges on unauthorised payments

Sections 208(2)to(4) and 209(3)to(5) Finance Act 2004

Unauthorised member payments

The person liable to the charge is

  • the member (or former member) who received the payment, or in respect of whom the payment was made, or
  • the person who receives the payment, if the payment was made after the death of the member or former member.

The charge is a freestanding tax charge, which means any losses the member may have cannot be set against the tax charge.

Unauthorised employer payments

The person liable to the charge is the sponsoring employer, or former sponsoring employer, who received the payment or in respect of whom the payment was made.

Joint liability

If more than one person is liable then those persons are jointly and severally liable to the charge in respect of the payment. Joint and several liability means that all parties to the charge are equally liable to the whole charge, and that payment by one will discharge the liability of the other(s), to the extent of the amount paid.

A person is liable to the unauthorised payments charge even if

  • they, or
  • any other person who is also liable to the unauthorised payments charge, or
  • the scheme administrator

are not resident or domiciled in the United Kingdom.

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Relief from members liability when orders made by court or the Pensions Regulator

Section 266A Finance Act 2004

The relief described below applies for orders made on or after 1 September 2014. For details of which orders applied before 1 September 2014 see RPSM04104770 on the National Archives version of the Registered Pension Scheme Manual (external users please go to [http://webarchive.nationalarchives.gov.uk//http://hmrc.gov.uk/manuals/r…](http://webarchive.nationalarchives.gov.uk//http://hmrc.gov.uk/manuals/rpsmmanual/RPSM00100000.htm)).

A person liable to the unauthorised payments charge and/or surcharge because of payment of an unauthorised member payment, may claim relief from a proportion of the unauthorised payments charge where:

  • property or money is transferred, or
  • a sum is paid

to a registered pension scheme in accordance with:

  • a court order made under section 16(1) or 19(4) Pensions Act 2004 or Article 12(1) or 15(4) Pensions (Northern Ireland) Order 2005,
  • an order by the Pensions Regulator under section 21(2)(a) Pensions Act 2004 or Article 17(2)(a) Pensions (Northern Ireland) Order 2005.

The claim for relief must be made within one year beginning with the day on which the property or money is transferred or the sum is paid to the scheme.

The amount of the unauthorised payments charge or surcharge that can be reclaimed is represented by the formula

ASO / UMP

ASO = the amount that is the total of

* the market value of any property transferred to the scheme,
* the amount of any money transferred to the scheme, and
* the amount of the sum paid to the scheme

in accordance with the order under sections 16(1), 19(4) and 21(2)(a) Pensions Act 2004 or Articles 12(1), 15(4) and 17(2)(a) Pensions (Northern Ireland) Order 2005.

UMP = the amount of the unauthorised member payment.

If ASO is more than UMP the amount of relief from the unauthorised payments charges that can be claimed is the whole amount of the unauthorised payments charge and/or surcharge.