HMRC toughens up scheme registration to tackle liberation fraud

HM REVENUE & CUSTOMS has made its scheme registration process more stringent in an attempt to prevent pension liberation fraud.

This comes after repeated calls from the industry for HMRC to improve registration in order to cut off liberation schemes at their inception Accountancy Age’s sister publication Professional Pensions reports.

From 21 October, HMRC will move away from a “process now, check later” approach.

Scheme registration will no longer be confirmed on successful submission of the online form, and instead the taxman will carry out “detailed risk assessment activity” before deciding to register a scheme.

HMRC will also make it more difficult to transfer funds between registered schemes. When trustees request information from HMRC about the legitimacy of a receiving scheme, the Revenue will no longer seek consent from that receiving scheme.

It said in its guidance: “However HMRC will only provide confirmation where the receiving scheme is registered and the information held by HMRC does not indicate a significant risk that the scheme was set up, or is being used, to facilitate pension liberation.

“Otherwise, a response will be issued setting out the conditions in which HMRC will confirm registration status and explain that one or both of the conditions are not satisfied.”

The change comes after trustees and administrators complained they feared allowing members to transfer to suspicious schemes, but also afraid they could breach their duties by blocking transfers (PP Online, 9 April), despite reassurance and guidance on transfers from The Pensions Regulator (TPR).

Association of British Insurers (ABI) director of life, savings and protection Steve Gay said: “We welcome this important development in the crackdown on pension liberation. The ABI has long called for HMRC to tighten up the process with which a registered pension scheme can be set up.

“ABI members are doing everything they can to prevent people falling victim to these schemes, reporting suspicious transfers to the enforcement agencies and government departments.

“We look forward to working with HMRC so that this process can be made effective in stopping fraudulent misuse of the pension system.”


Related reading