PTM135400 - Unauthorised payments: the scheme sanction charge: application for discharge from the scheme sanction charge
Glossary PTM000001
Discharge from the scheme sanction charge
Appeal against refusal of application to discharge liability to the scheme sanction charge
Discharge from the scheme sanction charge
Section 268 Finance Act 2004
The Registered Pension Schemes (Discharge of Liabilities under Sections 267 and 268 of the Finance Act 2004) Regulations 2005 - SI 2005/3452
For details of the scheme chargeable payments included in the list below for tax years before 2011-12, see National Archives version of page RPSM04104870.
The scheme administrator may apply to HM Revenue and Customs (HMRC) to discharge their liability to the scheme sanction charge in respect of a scheme chargeable payment on the following grounds:
- the scheme chargeable payment is an unauthorised payment under these sections of the Finance Act 2004:
- section 172 (assignment of benefits)
- section 172A (surrender)
- section 172B (increase in rights of connected person on death)
- section 172C (allocation of unallocated employer contributions)
- section 172D (limit on increase in benefits) or
- in any other case, the scheme administrator reasonably believed that the unauthorised payment was not a scheme chargeable payment and
- in all the circumstances of the case it would not be just or reasonable for the scheme administrator to be liable to the scheme sanction charge in respect of the unauthorised payment.
This ‘good faith’ protection is aimed at the situation where the scheme administrator has been misled, or been given incomplete information, by the member or employer (or another party acting for them) leading them to assume wrongly that the payment was an authorised payment.
Scheme administrators should retain documentary evidence of any statement, or information, they have relied on.
The application for discharge of liability to the scheme sanction charge must be made in writing and set out the particulars of the grounds for the discharge of liability. The application must be made within the following time limits.
Circumstances | Time limit |
---|---|
Where the scheme administrator is a company | 6 years after the end of the accounting period in which the scheme sanction charge arose |
If the scheme administrator is not a company | 5 years after 31 January following the year of assessment in which the scheme sanction charge arose |
Where the assessment for the scheme sanction charge is made under section 36 Taxes Management Act 1970 (extended discovery assessment due to fraudulent or negligent conduct) | 2 years from the date on which the assessment is issued (as stated on the notice of assessment) |
Appeal against refusal of application to discharge liability to the scheme sanction charge
Section 269 Finance Act 2004
Where HMRC refuses the application to discharge the scheme administrator’s liability to the scheme sanction charge, the scheme administrator can appeal against this decision. The appeal should be made to HMRC before any notification to the tribunal.
Under the appeal and review process either HMRC or, if necessary, a tribunal may decide whether the decision was right.