Money Marketing revealed last week the High Court had ruled to wind up the troubled Sipp operator. PricewaterhouseCoopers has been appointed liquidator.
Generally, a pension provider in this situation will be immediately de-registered by HMRC, triggering a 40 per cent tax charge on all assets. According to Freedom Sipp terms and conditions, this penalty would be passed on to clients.
But Money Marketing has seen written confirmation from the HMRC’s audit and pension scheme services division that a client will not incur a tax charge if they transfer the administration of their Sipp to another provider.
Prompted by the High Court decision, the client asked HMRC: “I am now proposing to move all of my Sipp administration as quickly as matters can be progressed. I would also like to have assurances from HMRC that in doing so I will not incur any form of tax charges or penalties?”
Responding, an HMRC employee stated: “I can confirm that in making a transfer in the way that you have mentioned, no tax charges will be incurred.”
HM Revenue & Customs applied to have the Sipp provider wound up due to a dispute involving outstanding VAT payments of up to £160,000, Money Marketing understands.
The case was heard by Justice Briggs on Wednesday last week after an earlier winding up hearing on September 23 was adjourned.
At February last year, Freedom Sipp held assets worth £165m for around 350 members. Freedom Sipp director John Quarrell estimated the firm had around 150 members still invested last week.
Liberty Sipp, AJ Bell, IPS and Hornbuckle Mitchell are understood to have taken on some of the firm’s clients.
Freedom Sipp has been closed to new business since September 2008. The FSA changed the firm’s permission in July after finding it failed to seek the right customer authorisation before moving funds and also failed to notify customers of charges deducted from their funds.
Customers have been free to transfer their funds, and encouraged to consider this option by the FSA since this date, although this has proven difficult for many.
Freedom Sipp’s head count has reduced significantly since the FSA investigation began and the majority of staff are now working from home.