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HMRC bolsters crackdown on pension unlocking with new team

by Daniel Grote on Jan 16, 2013 at 12:16

HMRC bolsters crackdown on pension unlocking with new team

HM Revenue & Customs (HMRC) has bolstered its clampdown on pension unlocking schemes with the launch of a new team focused on the practice.

HMRC said in a statement it had launched a counter fraud and avoidance team to tackle pension unlocking schemes.

'Companies offering [pension unlocking schemes] are potentially landing clients with serious problems down the line because pension "liberation" payments are not intended by tax law and so could have serious tax consequences for both individuals and companies involved,' it said.

'In addition the fees charged mean those using these schemes risk financial loss on top of repaying the tax relief.'

The High Court ruled in December 2011 that schemes allowing savers to access their pension funds before reaching age 55 were illegal.

The Financial Services Authority has also issued warnings to consumers about firms offering such services.

4 comments so far. Why not have your say?

Mr Man

Jan 16, 2013 at 14:15

Pension unlocking schemes would not be so popular if investing in a UK pension had not become such poor value for money. The constant tinkering with TFC and availability of benefits, over complicated rules and the ridiculous HMRC position of never being able to have access to funds prior to "current" minimum retirement age ( currently 55) all conspire to make investing in a UK pension a never do action. For those poor buggers in one, they want out. Ask your self why !

Tax relief up front taxed back in retirement. It not that good a deal without any emergency access. People do lose their homes...HMRC don't care. NEVER NEVER NEVER, invest in a UK pension. Put all available excess money in an ISA. That will cover 99% of the public.

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Ian Craig (Yorkie)

Jan 16, 2013 at 15:05

What absolute rubbish Mr Man. Do you expect employers to pay in to an ISA? Or would you rather employees lose the benefit of any company contribution?

Think straight or don't bother!

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Jan 16, 2013 at 15:36

@ Mr Man

Yes it would be as popular - there will always be people desperate for money or who just dont want to play by the rules and there are companies out there who will take full advantage of that!

@ Morley Boy

Some of the folk that run these schemes are fairly unsavoury and threaten legal action at the drop of a hat - I speak from personal experience!

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Richard Hardy

Jan 17, 2013 at 09:44

The Government should first be looking at why these 'schemes' are being marketed.

Pensions have become evermore inflexible and a far less attractive investment offering since the period when many of the plans were taken out. Poor fund returns, falling annuity rates and too many negatives alterations and restrictions brought in by successive Governments who forget that the majority of the money in these plans belongs to the plan owner.

The Government needs to look less at restricting the pension plan as a product and more at bringing it up to date. If they don't, just look at HMV, Jessops & Blockbuster who failed to evolve.

One solution could be to amend pension legislation to allow loan-backs less a tax charge.

Any loan will be subject to a tax charge equivalent to the tax relief given at outset thus increasing the Government tax take at a time when they are also skint.

Pensions will become more attractive if they will become more flexible.

This will also release funds to the economy on which many purchases will attract VAT thus further increasing the Government's tax take whilst keeping money flowing into the economy.

It will be a way of removing the dodgy schemes with little effort and cost.

Trying to batten down the hatches will simply cost millions in legal costs and time wasted chasing the scheme providers through the courts whilst reducing even further the attractiveness of pension investment.

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