HMRC withholds data on pension freedoms fines

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HMRC is refusing to say how many people have broken new pensions reporting rules or how much it has collected in fines.

A Freedom of Information request lodged with the tax office – and seen by Money Marketing – was blocked because the information “could be used by opportunistic individuals to undermine HMRC’s processes in dealing with such activity and this would be likely to have a detrimental impact on our ability to assess and collect tax”, HMRC says.

Last year, Money Marketing revealed the Taxation of Pensions Bill would have forced individuals who accessed the Budget freedoms to inform all their providers they were subject to the restricted £10,000 annual allowance.

However, following industry pressure, the Treasury U-turned and said individuals had to contact only current and future providers they might save with.

But thousands of savers could still face a £300 fine if they miss the 91-day deadline, with a £60 fine levied for each subsequent day. In addition they will be fined £3,000 if they submit inaccurate information.

Providers have warned the number of people reporting to them has been well below expectations.

Suffolk Life head of communications and insight Greg Kingston says: “It is disappointing that HMRC has chosen not to release this information. It is possible that hundreds of thousands of pension savers are using flexi-access drawdown to access their pension funds. This data would have shown how effectively that process was being followed and given an indication on whether further education was required.”

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. If you go by the current inefficiencies of HMRC, by the time they actually discover who has or has not made the declarations and then finally set out the fines notices they will probably have to deal with the deceased estate.

  2. That’s possible Harry, but the other possibility may be worse. That is, as with people who contributed to two ISAs in one tax year, that HMRC takes a few years to catch up and then applies the fine when the individual is well into retirement and has more limited means.

    If HMRC had made this data available it would have been an excellent awareness exercise. Thousands could be sleepwalking into future fines, or the alternative is that HMRC do not apply them at all which would make a mockery of the rules and demonstrate that there’s no effective control over the cost of tax relief.

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