Finance Act 1998

Section 92.

SCHEDULE 15 U.K. Approved retirement benefits schemes

Amendment of section 591C of the Taxes Act 1988 U.K.

1 (1) Section 591C of the Taxes Act 1988 (charge to tax arising on cessation of approval) shall be amended as follows. U.K.

(2) In subsection (4) (section to apply to schemes in respect of which either of the specified conditions is satisfied), for “either" there shall be substituted “ one or more ”.

(3) After subsection (6) there shall be inserted the following subsection—

“(6A) The third condition is satisfied in respect of a scheme if—

(a) at any time within the period of three years ending with the date of the cessation of the approval of the scheme, the scheme has received a transfer value in respect of any person;

(b) contributions made by or in respect of that person to any approved pension arrangements (whether or not those from which the transfer value was received) were represented in the transfer value; and

(c) the contributions so represented were made by or in respect of that person by reference to—

(i) any service by him with a company of which he is or has at any time been a controlling director;

(ii) any remuneration in respect of any such service; or

(iii) any income chargeable to tax under Schedule D and immediately derived by him from the carrying on or exercise by him (whether as an individual or in partnership with others) of a trade, profession or vocation.”

(4) In subsection (7) of that section (meaning of “controlling director"), for “subsection (6) above" there shall be substituted “ this section ”.

(5) After that subsection there shall be inserted the following subsections—

“(8) In subsection (6A) above—

(a) the references to the receipt of a transfer value by a scheme are references to the transfer, so as to become held for the purposes of the scheme, of any sum or asset held for the purposes of any other approved pension arrangements; and

(b) the references to contributions to approved pension arrangements include references to—

(i) any contributions made in accordance with, or for the purposes of, the arrangements; and

(ii) anything paid by way of premium or other consideration under an annuity contract for which the arrangements provide.

(9) In this section “approved pension arrangements” means—

(a) any scheme or arrangements approved for the purposes of this Chapter or Chapter IV of this Part or, in relation to a time before 6th April 1988, the corresponding provisions then in force;

(b) any scheme being considered for approval under this Chapter;

(c) any annuity contract entered into for the purposes of any scheme or arrangements falling within paragraph (a) or (b) above; or

(d) any contract or scheme approved for the purposes of Chapter III of this Part or, in relation to a time before 6th April 1988, the corresponding provisions then in force.”

(6) This paragraph has effect in relation to any case in which the date of the cessation of the approval is on or after 17th March 1998.

Amendment of section 591D U.K.

2 (1) In section 591D(3) of the Taxes Act 1988 (persons loans to whom are loans to which the valuation rule in section 591D(2) applies), for paragraphs (c) and (d) there shall be substituted the following paragraphs— U.K.

“(c) any person who has at any time (whether or not before the making of the loan) been a member of the scheme;

(d) any person connected, at the time of the making of the loan or subsequently, with a person falling within paragraph (c) above.”

(2) This paragraph has effect in relation to any case in which the date of the cessation of the approval of the scheme is on or after 17th March 1998.

Application for scheme approval U.K.

3 (1) In subsection (1) of section 604 of the Taxes Act 1988 (application for approval)— U.K.

(a) for “the administrator of the scheme" there shall be substituted “ the appropriate applicant ”; and

(b) in paragraph (c), after “given to the" there shall be inserted “ appropriate applicant, ”.

(2) After that subsection there shall be inserted the following subsection—

“(1A) In subsection (1) above “the appropriate applicant” means—

(a) in the case of a trust scheme, the trustee or trustees of the scheme; and

(b) in the case of a non-trust scheme, the scheme sponsor or scheme sponsors;

and subsection (9) of section 611AA applies for the purposes of this subsection as it applies for the purposes of that section.”

(3) This paragraph has effect in relation to any application made on or after the day on which this Act is passed.

Information powers U.K.

4 U.K. In section 605(1B) of the Taxes Act 1988 (matters about which information may be obtained in pursuance of regulations under section 605(1A) of that Act), for paragraph (a) there shall be substituted the following paragraph—

“(a) a scheme which is or has been an approved scheme;”.

Employers responsible for discharging administrator’s duties U.K.

5 (1) Section 606 of the Taxes Act 1988 (persons responsible where there is no administrator or the administrator cannot be traced or is in default) shall have effect, and shall be deemed always to have had effect, with the insertion of the following subsection after subsection (9)— U.K.

“(9A) Where by virtue of this section any person is the person, or one of the persons, responsible for the discharge of the duties of the administrator of a scheme, any power or duty by virtue of this Part to serve any notice on, or to do any other thing in relation to, the administrator may be exercised or performed, instead, by the service of that notice on that person or, as the case may be, by the doing of that other thing in relation to that person.”

(2) After subsection (11) of that section there shall be inserted the following subsection—

“(11A) In determining for the purposes of this section—

(a) whether all of the persons who are the administrator of a scheme are at any time in default in respect of an amount of tax chargeable by virtue of section 591C, or

(b) whether a trustee of a scheme is in default in respect of any amount of tax so chargeable,

the persons who at that time are trustees of the scheme or hold appointments in relation to the scheme under section 611AA(4) to (6) shall be deemed not to include any person who by virtue of section 591D(4) is not liable for that tax.”

(3) Sub-paragraph (2) above has effect for determinations made in relation to any time on or after 17th March 1998.

Recourse to scheme members in respect of section 591C charge U.K.

6 (1) After section 606 of the Taxes Act 1988 there shall be inserted the following section— U.K.

“606A Recourse to scheme members.

(1) This section applies where—

(a) an approval of a retirement benefits scheme has ceased to have effect;

(b) a person (“the employer") has become liable by virtue of section 606 to any tax chargeable on the administrator of the scheme under section 591C;

(c) the employer has failed, either in whole or in part, to pay that tax; and

(d) a person falling within subsection (2) below (“the relevant member") was a member of the scheme at the time (“the relevant time") immediately before the date of the cessation of its approval.

(2) A person falls within this subsection in relation to any tax chargeable under section 591C if—

(a) at the relevant time or at any time before that time he was a controlling director of the employer; or

(b) he is a person by or in respect of whom any contributions were made by reference to which the condition in subsection (6A) of that section has been satisfied for the purpose of the charge to that tax.

(3) Subject to subsection (4) below, if in a case where this section applies—

(a) the employer has ceased to exist, or

(b) the Board notify the relevant member that they consider the failure of the employer to pay the unpaid tax to be of a serious nature,

the relevant member shall be treated as included in the persons on whom the unpaid tax was charged and shall be assessable accordingly.

(4) The amount of tax for which the relevant member shall be taken to be assessable by virtue of this section shall not exceed the amount determined by—

(a) taking the amount equal to 40 per cent. of his share of the scheme; and

(b) subtracting from that amount his share of any tax charged under section 591C that has already been paid otherwise than by another person on whom it is treated as charged in accordance with this section.

(5) For the purposes of this section the relevant member’s share of the scheme is the amount equal to so much of the value of the assets held for the purposes of the scheme at the relevant time (taking the value at that time) as, on a just and reasonable apportionment, would have fallen to be treated as the value at that time of the assets then held for the purposes of the provision under the scheme of benefits to or in respect of the relevant member.

(6) For the purposes of this section the relevant member’s share of an amount of tax already paid is such sum as bears the same proportion to the amount paid as is borne by his share of the scheme to the total value at the relevant time of the assets then held for the purposes of the scheme.

(7) The reference in subsection (5) above to the provision of benefits to or in respect of the relevant member includes a reference to the provision of a benefit to or in respect of a person connected with the relevant member.

(8) For the purposes of this section a person is a controlling director of a company if he is a director of the company and is within section 417(5)(b) in relation to the company.

(9) A notification given to any person for the purposes of subsection (3)(b) above may be included in any assessment on that person of the tax to which he becomes liable by virtue of the notification.

(10) An assessment to tax made by virtue of this section shall not be out of time if it is made within three years after the date on which the tax which the employer has failed to pay first became due from him.

(11) Subsections (1) to (3) of section 591D shall apply to the determination of the value at any time of an asset held for the purposes of a scheme as they apply for the purposes of section 591C(2).

(12) Subsections (7) and (8) of section 591D shall apply for the purposes of this section as they apply for the purposes of subsection (1) of section 591C and section 591C, respectively.

(13) Section 839 (connected persons) shall apply for the purposes of this section.”

(2) This paragraph has effect in relation to any case in which the date of the cessation of the approval is on or after 17th March 1998.

Modification of certain existing approved schemes U.K.

7 (1) This paragraph applies in relation to any retirement benefits scheme which— U.K.

(a) was approved by the Board on or before 17th March 1998; and

(b) contains provision requiring one of the trustees of the scheme to be an approved independent trustee.

(2) Notwithstanding anything to the contrary in the scheme or its rules, the appointment (whenever made) of any person to be a trustee of the scheme, and any requirement on him or entitlement of his to act as such, shall be (and be treated as having been) incapable of termination at any time on or after 17th March 1998 except—

(a) by the death of that person;

(b) by an order of the court;

(c) by virtue of section 3, 4 or 29 of the M1 Pensions Act 1995 or Article 3, 4 or 29 of the M2 Pensions (Northern Ireland) Order 1995 (prohibition, suspension or disqualification); or

(d) in circumstances mentioned in sub-paragraph (3)(a), (b) or (c) below, in accordance with the rules of the scheme.

(3) Those circumstances are—

(a) where the trustee is not the trustee by reference to whom the requirement mentioned in sub-paragraph (1)(b) above was satisfied immediately before the termination;

(b) where immediately after the termination that requirement is satisfied by reference to a trustee whose appointment takes effect at that time;

(c) where the trustee whose appointment is terminated has committed a fraudulent breach of trust in relation to the scheme and that is the reason for the termination.

(4) Any provisions of the scheme or of any instrument by which the administration of the scheme is governed which require a successor to an approved independent trustee of the scheme to be appointed in specified circumstances shall have effect, in relation to any case in which those circumstances arise at a time on or after the day on which this Act is passed, as if they required the appointment to be made no more than 30 days after that time.

(5) Subsection (5) of section 591D of the Taxes Act 1988 (meaning of “approved independent trustee") shall apply for the purposes of this paragraph as it applies for the purposes of that section.

(6) In this paragraph “retirement benefits scheme” has the same meaning as in Chapter I of Part XIV of the Taxes Act 1988, and “approved” means approved for the purposes of that Chapter or any enactment re-enacted in that Chapter.

Marginal Citations

M1 1995 c. 26.

M2 S.I. 1995/3213 (N.I. 22).