Pensions minister Guy Opperman has given assurances HM Revenue & Customs will not use powers to de-register legitimate small self-administered schemes, in a letter seen by Money Marketing.
The letter from Opperman to MP Mike Freer dated 18 December 2017 attempts to answer concerns about the new powers HMRC will acquire this April to de-register schemes it believes are not used for legitimate retirement purposes.
These powers are contained in the Finance (No.2) Bill 2017-19, which is currently at the report stage in the House of Commons and and the authorisation regime introduced by the Pension Schemes Act 2017.
The former bill has been the subject of lobbying from former pensions minister Baroness Ros Altmann who wrote an article in January warning about the potential negative effects of the legislation.
In the letter, Opperman says: “This legislation gives HMRC the power to de-register a scheme, or to refuse to register a scheme if a sponsoring employer is a dormant company, but it is not required to do so.
“HMRC would only de-register a scheme where it is satisfied that the scheme is not being operated for the provision of legitimate retirement benefits.”
Barnett Waddingham has also lobbied strongly as it is one of the largest players in the SSAS market with 2,177 plans and £4.1bn of funds under management.
It asked customers to take part in a ‘write to your MP’ campaign after industry responses to HMRC’s initial technical consultation regarding the draft clauses and the submitting of written evidence to the public bill committee did not seem to have any effect.
Barnett Waddingham Sipp technical specialist James Jones-Tinsley explains the effects of the campaign.
He says: “Pleasingly, a number of our clients took up our request, and we have since received back – via them – responses from their MPs.
“Perhaps the biggest success of all was a letter addressed directly to Philip Hammond; countersigned by one of our clients (who sits in the House of Lords) and Ros Altmann.
“Although – to date – there is no evidence that the draft legislation has been amended to assist in minimising the risk of de-registration to bona fide SSAS’s, reassuring words have been received from Mr Opperman and [economic secretary to the Treasury] Mr Glen that HMRC will not seek to de-register a pension scheme lightly, and we hope that will be borne out in practice.”
A HMRC spokesman says: “Where an existing registered pension scheme has a dormant company as a sponsoring employer, HMRC would only de-register the scheme where there is clear evidence that it is not being used to provide legitimate pension benefits within the tax rules.
“HMRC does not use the existing power to de-register schemes lightly, and this will continue with the extended power.”