View the article online at http://citywire.co.uk/money/article/a943222
Tax man challenges 'in specie' pension contributions
Business owners and others using property and shares to make pension contributions could face HM Revenue & Customs crackdown.
Business owners and other people who use property and shares to make pension contributions could be the subject of a crackdown by HM Revenue & Customs.
In recent weeks the tax man has challenged pension providers over the practice of in specie transfers which allow people to put non-cash assets into their retirement plans. Provided strict criteria are met, individuals can claim back tax relief on the transfers just as they would with a normal contribution into a pension.
Neil MacGillivray, chairman of the Association of Member Directed Pension Schemes’ (Amps), told Citywire's New Model Adviser there was a ‘very strong possibility’ HMRC could ask for tax relief back on contributions stretching back to 2009. This would have significant 'financial costs' for individuals and pension providers he said.
In specie transfers are an example of the specialist pension and tax planning conducted by financial advisers. They typically occur in self-invested personal pensions (Sipps) and small self-administered pension schemes (SSAS).
HMRC would not comment on its change in policy but following a meeting of AMPS members in London yesterday Dentons and James Hay said they had suspended such contributions while they sought clarity on the situation.
Phil Smith, chief executive of Embark, which owns Sipp and SSAS providers Hornbuckle and Rowanmoor, said neither had ‘automatically’ suspended in-specie transfers but was looking at them cautiously on a case-by-case basis.
MacGillivray said: ‘What you have is a situation here, and we don’t know the number of Sipp firms affected, but where there is in-specie contributions, the Revenue is challenging whether or not relief at source is available.’
He added: ‘The outcome of the meeting is we are going to gather information from firms affected, look and see what the common threads are and then probably in the first instance we will correspond with the Revenue directly on it.’
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by Daniel Grote on Mar 30, 2017 at 16:21