95Personal pensions: charge on withdrawal of approval
(1)After section 650 of the Taxes Act 1988 (withdrawal of approval) there shall be inserted the following section—
“650ACharge on withdrawal of approval from arrangements
(1)Where any personal pension arrangements cease to be approved arrangements by virtue of the exercise by the Board of their power under section 650(2), tax shall be charged in accordance with this section.
(2)The tax shall be charged under Case VI of Schedule D at the rate of 40 per cent. on an amount equal to the value (taking that value at the relevant time) of the appropriate part of the assets held at that time for the purposes of the relevant scheme.
(3)In subsection (2) above—
“the appropriate part”, in relation to the value of any assets, is so much of those assets as is properly attributable, in accordance with the provisions of the scheme and any just and reasonable apportionment, to the arrangements in question; and
“the relevant time” means the time immediately before the date from which the Board’s approval is withdrawn.
(4)Subject to subsection (5) below, the person liable for the tax charged under this section shall be the scheme administrator for the relevant scheme.
(5)If, in any case where an amount of tax has been charged under this section and has not been paid—
(a)there is at any time no person who, as the scheme administrator for the relevant scheme, may be assessed to that amount of tax, or is liable to pay it,
(b)the scheme administrator for that scheme cannot for the time being be traced,
(c)there has been such a failure by the scheme administrator for that scheme to meet a liability to pay that amount as the Board consider to be a failure of a serious nature, or
(d)it appears to the Board that a liability of the scheme administrator for that scheme to pay that amount of tax is a liability that he will be, or (were there an assessment) would be, unable to meet out of assets held in accordance with the scheme for the purposes of those arrangements,
the Board shall be entitled to assess the unpaid tax on the person who made the arrangements in question as if the tax charged under this section, to the extent that it is unpaid, were assessable under this section on that person, instead of on the scheme administrator.
(6)An assessment to tax made by virtue of subsection (5)(c) above shall not be out of time if it is made within three years after the date on which the tax which the scheme administrator has failed to pay first became due from him.
(7)For the purposes of this section the value of an asset is, subject to subsection (8) below, its market value, construing “market value” in accordance with section 272 of the 1992 Act.
(8)Where an asset held for the purposes of a scheme is a right or interest in respect of any money lent (directly or indirectly) to any person mentioned in subsection (9) below, the value of the asset shall be treated as being the amount owing (including any unpaid interest) on the money lent.
(9)Those persons are—
(a)the person who (whether or not before the making of the loan) made the arrangements in relation to which the Board’s approval has been withdrawn;
(b)any other person who has at any time (whether or not before the making of the loan) made contributions under those arrangements; and
(c)any person connected, at the time of the making of the loan or subsequently, with a person falling within paragraph (a) or (b) above.
(10)In this section “the relevant scheme”, in relation to any personal pension arrangements, means the scheme in accordance with which those arrangements were made.
(11)Section 839 shall apply for the purposes of this section.”
(2)In section 650 of that Act (withdrawal of approval), the following subsection shall be inserted after subsection (5)—
“(6)The power of the Board under this section to withdraw their approval in relation to any arrangements made under a personal pension scheme shall be exercisable for the purposes of section 650A notwithstanding that the time from which the approval is withdrawn is a time from which, by virtue of section 631(4) or 638A(4), the whole scheme ceases to be an approved scheme.”
(3)After section 239A of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 there shall be inserted—
“Personal pension schemes
239BWithdrawal of approval of approved arrangements
(1)This section applies where tax is charged in accordance with section 650A of the Taxes Act (tax charged on the withdrawal of the Board’s approval in relation to approved personal pension arrangements).
(2)For the purposes of this Act the appropriate part of the assets which at the relevant time are held for the purposes of the relevant scheme—
(a)shall be deemed to be acquired at that time for a consideration equal to the amount on which tax is charged by virtue of section 650A(2) of the Taxes Act; but
(b)shall not be deemed to be disposed of by any person at that time.
(3)The person who shall be deemed in accordance with subsection (2)(a) above to have acquired the appropriate part of the assets shall be the person who would be chargeable in respect of a chargeable gain accruing on a disposal of the assets at the relevant time.
(4)In this section—
“the appropriate part” and “the relevant time” have the meanings given by subsection (3) of section 650A of the Taxes Act for the purposes of subsection (2) of that section; and
“the relevant scheme” has the same meaning as in that section.”
(4)This section has effect in relation to any case in which the date from which the Board’s approval is withdrawn is a date on or after 17th March 1998, except a case where the notice under section 650(2) of the Taxes Act 1988 was given before that date.