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HMRC orders 40 firms to switch auto-enrol providers

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HM Revenue & Customs has ordered around 40 employers to find a new auto-enrolment provider after discovering schemes were not tax-approved.

HMRC stepped in after compliance checks found some schemes run by Source Pensions did not have tax-approved status, the Telegraph reports.

Around 40 firms have been given three months to move employees’ pension savings to an alternative scheme. Tax relief already accrued will be retained because HMRC says employers acted in good faith.

A Source Pensions spokesman says: “Unfortunately some Source Pensions clients’ schemes had not received tax-approved status from HMRC prior to contributions commencing.

“We are in dialogue with HMRC about a possible solution to this regrettable situation.”

An HMRC spokeswoman says: “We don’t discuss identifiable cases. For a pension scheme to receive tax relief, it must be registered with HMRC. For each of the employers affected, the scheme administrator for the pension scheme failed to complete the HMRC pension scheme registration process correctly.

“In these cases, we won’t take action to recover the tax relief provided incorrectly under an unregistered scheme as employers and employees were trying to comply with their legal obligations.

“Employers must find another HMRC registered pension scheme to transfer accrued benefits in to. This will put the employees back into the exact position they should have been, had their current pension scheme been correctly registered.”

Over a million small firms are due to hit their auto-enrolment staging dates over the new two years.

Traditional life companies have shied away from providing auto-enrolment to small employers and have imposed minimum requirements.

But Government-backed scheme Nest and rival mastertrusts The People’s Pension and Now: Pensions say they are open to any employer.

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Of course they didn’t have tax approved status. In order to obtain this you must have.

    A very limited choice of funds
    These funds have to be the naffest available.
    You must not allow single premium contributions
    You must complete reams of paperwork
    You must act as an unpaid arm of Work & Pensions.

  2. Christine Brightwell 7th July 2015 at 10:26 am

    Harry I think you could have made that into poetry

  3. Hats off to HMRC for not taking the tax relief back.
    As the Scheme Administrator should have a working knowledge of Pensions and Pension Tax Legislation, getting the Schemes registered should be the easy part. They should know that the process has to be done in a certain order and the chances are this was a single master trust anyway, so they definitely should have had that registered before they started SELLING its Membership.

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