The following Pensions practice note produced in partnership with Mark Smith and Georgina Wardrop of Taylor Wessing LLP and Martin Scott of gunnercooke LLP provides comprehensive and up to date legal information covering:
There are no limits on the benefits that may be provided by a registered pension scheme. However, under the Finance Act 2004 (FA 2004) if a scheme makes an unauthorised payment:
tax charges will generally arise on both the recipient and the scheme. For further information, see Tax charges on making unauthorised payments, below
ultimately, the scheme may also risk de-registration, which would result in the loss of tax-privileged status for the scheme. For further information, see De-registration and the de-registration charge, below
certain reporting requirements will apply. For further information, see Reporting requirements and penalties, below
Under certain circumstances, HMRC will grant a discharge from certain of the tax charges on unauthorised payments. For further information, see Applying to HMRC for discharge from tax charges, below.
There are also other exceptions to the usual position on unauthorised payments. These are covered in Practice Note: Unauthorised payments: exceptions.
For information on what unauthorised payments are, see Practice Note: Authorised and unauthorised payments.
The tax charges that may apply when an unauthorised payment is made are:
an unauthorised payments charge
an unauthorised payments surcharge, and
a scheme sanction charge
If a scheme makes too many unauthorised payments, it also risks its registration being withdrawn by HMRC.
Where an unauthorised payment is made, a tax charge of
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