HM REVENUE & CUSTOMS has published updated guidance on how consultancy charging can be applied to group pension schemes.
The guidance – which covers rebated commission, adviser charging and consultancy charging – comfirms an employer can take financial advice in relation to setting up a group personal pension scheme and that the cost of this could be taken out of members’ funds, Accountancy Age’s sister publication Professional Pensions reports.
However, HMRC has stressed that for a charge to be considered an authorised member payment, it must be a “genuinely commercial” arrangement “appropriate in relation to the service the adviser provided”.
Services eligible for consultancy charging include giving advice or assistance to an employer on the operation of the scheme, helping the employer enrol employees and advising employees about membership of the scheme.
Hargreaves Landsdown head of pensions research Tom McPhail (pictured) said was pleased that HMRC had clarified what would and would not be an unauthorised member payment.
“They seem to have taken a fairly pragmatic view,” he said.
“Consultancy charging is necessary in some cases to cover the cost of implementation, but where a member is being asked to pay for a service, it’s vital that there’s absolute clarity about what service is being provided and what the member is paying for that service.
“As far as possible much of any consultancy charge should be devoted towards giving the member good quality communication, good quality engagement, and helping the member to get the best possible value out of their retirement savings.”
The clarifications come after insurers raised concerns that members of schemes could be subject to unauthorised payment charges when the Retail Distribution Review is implemented in January.
Brexit could hit UK GDP by as much as 3% by 2020, the international economic body has claimed
Governmental pressure to crack down on tax evasion is resulting in HMRC applying its criminal investigation policy in an inconsistent manner, writes Kingsley Napley's David Sleight
Colin takes a wry look at how accountants are funding their retirement
Chancellor releases tax return following the controversy surrounding tax affairs of politicians, reveals connection with accountancy firm HW Fisher & Company