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HMRC moves to quell tax fears on CAR

HM Revenue & Customs has confirmed that it does not expect advice fees taken out of a pension contract to attract tax penalties if customer-agreed remuneration is introduced.

Skandia called for clarification last week after warning that it could be an unintended consequence of the retail distribution review. It was worried that charges taken out of a pension under CAR could be classified as an unauthorised payment and attract a tax penalty.

An HMRC spokeswoman says: “I can confirm that HMRC held discussions with industry representative bodies in 2007 about how CAR was expected to work in relation to contributions to pension schemes.

“On the basis of the information presented during these discussions, HMRC did not have any concerns that genuinely commercial remuneration arrangements would create unauthorised payments.”

Facts and Figures Financial Planners managing director Simon Webster says: “If commission is okay and does not attract a tax penalty, you would assume that it would be the same with advice fees.”


Absolute appetite

As the credit crunch continues to hit funds, investor demand for absolute return offerings has continued to soar.

Case for the defence

It should be made clear that at no stage have I accused Adam Samuel of showing any sympathy for the Pickerings and their legal battles against the Financial Ombudsman Service.


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