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HMRC internal manual

Pensions Tax Manual

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HM Revenue & Customs
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The scheme administrator: penalties

Glossary PTM000001
   

The scheme administrator has responsibility for a number of duties - see PTM151000. Where the scheme administrators fails in respect of a particular duty, a penalty may be imposed.

The sections on the Accounting for Tax return (PTM162000), Event Report (PTM161000) and Pension Scheme Return (PTM163000) includes for guidance on penalties for late filing and incorrect returns and late payment of tax where appropriate.

Penalty provisions for other requirements under the Registered Pension Schemes (Provision of Information) Regulations 2006
Failure to preserve documents
Transfer to insured schemes
Provision of false statements or documents
Winding up to facilitate payment of lump sums

Penalty provisions for other requirements under the Registered Pension Schemes (Provision of Information) Regulations 2006

Section 98 Taxes Management Act 1970

PTM160300 outlines the information requirement for scheme administrators. This covers providing information to HMRC, members, other scheme administrator, insurance companies, legal personal representatives and certain overseas pension schemes.

The same range of penalties that apply to the event report apply to these other prescribed information requirements. That is:

  • a penalty of up to £300 for failure to provide the required information on time (this covers both non provision and late provision)
  • where the initial failure to provide penalty has been levied and the information still hasn’t been provided further penalties may be due. These penalties can be daily penalties of up to £60 for every day that the failure to provide the required information continues, and
  • a penalty of up to £3,000 where incorrect information has been provided and the inaccuracy is due to either negligence or fraud.

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Failure to preserve documents

Section 258(2) Finance Act 2004

If a scheme administrator fails to comply with the information preservation requirements, see PTM160200, they can be liable to a penalty of up to £3,000.

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Transfer to insured schemes

Section 266 Finance Act 2004

A scheme administrator making a transfer to a fully insured pension scheme will be liable to a penalty of up to £3,000 if the transfer is not made to either:

  • the receiving scheme administrator or
  • an insurance company that has issued any of the insurance policies that the scheme has invested in.

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Provision of false statements or documents

Section 264 Finance Act 2004

Scheme administrators can be liable to a penalty of up to £3,000 if they fraudulently or negligently make a false statement or representation and as a result:

  • they, or any other person obtains relief from, or repayment of, tax chargeable under Part 4 Finance Act 2004, or
  • a scheme makes an unauthorised payment.

A scheme administrator will also be liable for a penalty of up to £3,000 if they assist in or induce the preparation of a document that they know to be inaccurate that will or is likely to cause a scheme to make an unauthorised payment.

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Winding up to facilitate payment of lump sums

Section 265 Finance Act 2004

The scheme administrator will be liable to a penalty if HMRC considers that a scheme has been, or is being, wound up wholly or mainly for the purpose of facilitating the payment of winding up lump sums or winding up lump sum death benefits (or both) then the scheme administrator is liable to a penalty.

The penalty can be up to £3,000 in respect of each member to whom a winding-up lump sum or winding-up lump sum death benefit has been paid.