Finance Act 2004

Discharge of tax liability: good faith

267Lifetime allowance charge

(1)This section applies where the scheme administrator of a registered pension scheme is liable to the lifetime allowance charge in respect of a benefit crystallisation event.

(2)The scheme administrator may apply to the Inland Revenue for the discharge of the scheme administrator’s liability to the lifetime allowance charge in respect of the benefit crystallisation event on the ground mentioned in subsection (3).

(3)The ground is that—

(a)the scheme administrator reasonably believed that there was no liability to the lifetime allowance charge in respect of the benefit crystallisation event, and

(b)in all the circumstances of the case, it would not be just and reasonable for the scheme administrator to be liable to the lifetime allowance charge in respect of the benefit crystallisation event.

(4)On receiving an application under subsection (2), the Inland Revenue must decide whether to discharge the scheme administrator’s liability to the lifetime allowance charge in respect of the benefit crystallisation event.

(5)The scheme administrator may apply to the Inland Revenue for the discharge of part of the scheme administrator’s liability to the lifetime allowance charge in respect of the benefit crystallisation event on the ground mentioned in subsection (6).

(6)The ground is that—

(a)the scheme administrator reasonably believed that the amount of the lifetime allowance charge in respect of the benefit crystallisation event was less than the actual amount, and

(b)in all the circumstances of the case, it would not be just and reasonable for the scheme administrator to be liable to an amount (“the excess amount”) equal to the difference between the amount which the scheme administrator believed to be the amount of the charge and the actual amount.

(7)On receiving an application under subsection (5), the Inland Revenue must decide whether to discharge the scheme administrator’s liability to the lifetime allowance charge in respect of the excess amount (or part of the excess amount).

(8)The discharge of the scheme administrator’s liability to the lifetime allowance charge (or to the excess amount or part of the excess amount) does not affect the liability of any other person to the lifetime allowance charge.

(9)The Inland Revenue must notify the scheme administrator of the decision on an application under this section.

(10)Regulations made by the Board of Inland Revenue may make provision supplementing this section; and the regulations may in particular make provision as to the time limits for the making of an application.

268Unauthorised payments surcharge and scheme sanction charge

(1)This section applies where—

(a)a person is liable to the unauthorised payments surcharge in respect of an unauthorised payment, or

(b)the scheme administrator of a registered pension scheme is liable to the scheme sanction charge in respect of a scheme chargeable payment.

(2)The person liable to the unauthorised payments surcharge may apply to the Inland Revenue for the discharge of the person’s liability to the unauthorised payments surcharge in respect of the unauthorised payment on the ground mentioned in subsection (3).

(3)The ground is that in all the circumstances of the case, it would be not be just and reasonable for the person to be liable to the unauthorised payments surcharge in respect of the payment.

(4)On receiving an application by a person under subsection (2) the Inland Revenue must decide whether to discharge the person’s liability to the unauthorised payments surcharge in respect of the payment.

(5)The scheme administrator may apply to the Inland Revenue for the discharge of the scheme administrator’s liability to the scheme sanction charge in respect of a scheme chargeable payment on the ground mentioned in subsection (6) or (7).

(6)In the case of a scheme chargeable payment which is treated as being an unauthorised member payment by section 172 (assignment), the ground is that, in all the circumstances of the case, it would not be just and reasonable for the scheme administrator to be liable to the scheme sanction charge.

(7)In any other case, the ground is that—

(a)the scheme administrator reasonably believed that the unauthorised payment was not a scheme chargeable payment, and

(b)in all the circumstances of the case, it would not be just and reasonable for the scheme administrator to be liable to the scheme sanction charge in respect of the unauthorised payment.

(8)On receiving an application under subsection (5), the Inland Revenue must decide whether to discharge the scheme administrator’s liability to the scheme sanction charge in respect of the unauthorised payment.

(9)The Inland Revenue must notify the applicant of the decision on an application under this section.

(10)Regulations made by the Board of Inland Revenue may make provision supplementing this section; and the regulations may in particular make provision as to the time limits for the making of an application.

269Appeal against decision on discharge of liability

(1)This section applies where the Inland Revenue—

(a)decides to refuse an application under section 267(2) (discharge of liability to lifetime allowance charge) or section 268 (discharge of liability to unauthorised payments surcharge or scheme sanction charge), or

(b)on an application under section 267(5), decides to refuse the application or to discharge the applicant’s liability to the lifetime allowance charge in respect of part only of the excess amount.

(2)The applicant may appeal against the decision.

(3)The appeal is to the General Commissioners, except that the person may elect (in accordance with section 46(1) of TMA 1970) to bring the appeal before the Special Commissioners instead of the General Commissioners.

(4)Paragraphs 1, 2, 8 and 9 of Schedule 3 to TMA 1970 (rules for assigning proceedings to General Commissioners) have effect to identify the General Commissioners before whom an appeal under this section is to be brought, but subject to modifications specified in an order made by the Board of Inland Revenue.

(5)An appeal under this section against a decision must be brought within the period of 30 days beginning with the day on which the applicant was given notification of the decision.

(6)The Commissioners before whom an appeal under subsection (1)(a) is brought must consider whether the applicant’s liability to the lifetime allowance charge, unauthorised payments surcharge or scheme sanction charge ought to have been discharged.

(7)If they consider that the applicant’s liability ought not to have been discharged, they must dismiss the appeal.

(8)If they consider that the applicant’s liability ought to have been discharged, they must grant the application.

(9)The Commissioners before whom an appeal under subsection (1)(b) is brought must consider whether the applicant’s liability to the lifetime allowance charge ought to have been discharged in respect of the excess amount or a greater part of the excess amount.

(10)If they consider that the applicant’s liability ought not to have been discharged in respect of the excess amount or a greater part of the excess amount, they must dismiss the appeal.

(11)If they consider that the applicant’s liability ought to have been discharged in respect of the excess amount or a greater part of the excess amount, they must discharge the applicant’s liability in respect of the excess amount or that part of the excess amount.