The tax man is stepping up a campaign to stamp out alleged pension liberation fraud and wants pension providers and advisers to act as whistle blowers.
HM Revenue and Customs head of compliance Kirsty Allsopp has appealed to the finance industry to send information about possible pension liberation outfits to tax investigators.
HMRC is responsible for monitoring registered pension providers, along with The Pensions Regulator and the Financial Conduct Authority.
She was addressing a technical workshop run by the Association of Member Directed Pension Schemes (AMPS).
“We want pension providers to work with the regulators on this,” she said. Pension unlocking is an important issue and we are working to stop it. We want people working in the pensions industry to phone us or drop us a line if something that looks suspicious crops up. The more help we get, the more action we can take.”
Sanctions promise
But although pension providers are willing to help HMRC crack down on pension liberation, they feel that sometimes refusing to transfer a pension fund can put them in a difficult legal position.
One problem highlighted by the AMPS is holding letters that verify a pension scheme’s status.
Pension administrators should complete transfers within three months, but HMRC is taking up to five months to issue the letters, which puts the administrators in the firing line from customers and legitimate pension funds who want to complete their switch.
Allsopp blamed the delays on internal changes at HMRC, which she explained would soon be resolved.
“The letter is only one of the checks pension administrators should be carrying out before making a fund transfer,” she said.
“If administrators have carried out thorough due diligence and the scheme turns out to be illegal, then HMRC will not pursue sanctions.”
Suspicious transfers
In a discussion about detecting pension liberation schemes, other delegates suggested some simple due diligence procedures –
Looking on Google Earth to see where the pension scheme is based was one check.
Gareth James, technical manager at AJ Bell explained his firm had a policy for asking for authority to confirm the scheme’s status with HMRC.
“Our experience is suspicious transfer requests are withdrawn at this stage if the receiving scheme is not a legitimate set up because they know they will be exposed to HMRC,” he said.
Pension liberation, sometimes called pension unlocking, is the practice of paying pension cash to someone under the age of 55, which is the current minimum age when a retirement saver can access their funds.
Who do I contact at HMRC to determine if a Company Scheme is genuine?
I have documents that are claimed to be HMRC approval of a QROPS scheme but the document looks like a poor fraud – it was however used to access and initiate pension transfers out of UK