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HMRC internal manual

Pensions Tax Manual

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HM Revenue & Customs
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Unauthorised payments: the unauthorised payments charge and the unauthorised payments surcharge: application for discharge from the unauthorised payments surcharge

Glossary PTM000001
   

Application for discharge

Sections 267, 268 and 269 Finance Act 2004

The Registered Pension Schemes (Discharge of Liabilities under Sections 267 and 268 of the Finance Act 2004) Regulations 2005 - SI 2005/3452

A person who is liable to pay the unauthorised payments surcharge of 15% in respect of an unauthorised payment can apply for it to be discharged. The person has to demonstrate that in the given circumstances it would not be just and reasonable for them to be liable to the 15% surcharge in respect of the payment.

Time limit for making an application for a discharge

Normally an application for an individual to be discharged from an unauthorised payment surcharge must be made no later than 5 years after 31 January next following the year of assessment to which the surcharge relates. However, if H M Revenue & Customs (HMRC) have raised an assessment in respect of the surcharge under Section 36 of the Taxes Management Act 1970 then an application for a discharge must be made within 2 years of the date that the assessment was issued.

Applying for a discharge - setting out particular reasons

The only grounds for applying for a discharge are that it would not be just and reasonable for the individual to be liable to the unauthorised payments surcharge. The application for a discharge must set out the particular reasons explaining why it would not be just or reasonable for the individual to be liable to the surcharge. The application will only be considered to be a complete application if it sets out the particular reasons of the ground relied on. HMRC are under no obligation to consider any incomplete applications for a discharge so the applicant should take care to fully set out the reasons why they believe that it would not be just and reasonable for them to be liable to the surcharge.

Applications on behalf of incapacitated individuals

The trustee or guardian of an incapacitated individual may make an application for a discharge on behalf of the incapacitated individual. In this context an individual is considered to be incapacitated if they are within the definition of an incapacitated person in Section 118 Taxes Management Act 1970.

Appeal against refusal of application to discharge liability to the unauthorised payments surcharge

Where HMRC refuses the application to discharge the individual’s liability to the unauthorised payments surcharge the individual can appeal against the decision. The appeal must be made to HMRC initially, before any notification to the tribunal.