SCHEDULES
SCHEDULE 35

Pensions: special annual allowance charge

Total adjusted pension input amount: modification in cases of avoidance scheme
6
1
This paragraph applies if there is a scheme the main purpose, or one of the main purposes, of which is to avoid or reduce liability to the special annual allowance charge, the annual allowance charge or the lifetime allowance charge by reducing the amount arrived at in accordance with paragraph 3(2) in relation to an arrangement under a pension scheme for the tax year (or for reducing that amount and the amount so arrived at for other tax years).
2
If the amount calculated under sub-paragraph (3) exceeds that arrived at in accordance with paragraph 3(2) in relation to the arrangement for the tax year, the amount so calculated is to be treated as if it were the amount so arrived at.
3
The amount is calculated by deducting—
a
the amount of the consideration that might be expected to be received in respect of an assignment (or assignation) of the benefits to which the individual or any dependant of the individual has a prospective entitlement under the arrangement at the beginning of the tax year, from
b
the amount of the consideration that might be expected to be received in respect of an assignment (or assignation) of the benefits to which the individual or any dependant of the individual has a prospective entitlement under the arrangement at the end of the tax year.
4
That calculation is to be made on the assumptions that—
a
the benefits are capable of assignment (or assignation),
b
the assignment (or assignation) is by a transaction between parties at arm's length, and
c
any power to reduce entitlement to the benefits does not exist.
5
If the arrangement ceases to exist during the tax year, the reference in sub-paragraph (3)(b) to the end of the tax year is to the time immediately before it ceases to exist.
6
Section 236 of FA 2004 applies for adjusting the amount in sub-paragraph (3)(b) as for adjusting the closing value of an individual's rights as calculated under section 234(5) of that Act (but as if references to the pension input period were to the tax year and whether or not the arrangement is a defined benefits arrangement).
Sch. 35 applied (with modifications) (with effect in accordance with art. 1(2) of the amending S.I.) by The Special Annual Allowance Charge (Application to Members of Currently-Relieved Non-UK Pension Schemes) Order 2009 (S.I. 2009/2031), arts. 1(1), 2-10
Sch. 35 ceased to have effect (10.12.2010) by virtue of The Finance Act 2009, Schedule 35 (Special Annual Allowance Charge) (Cessation of Effect) Order 2010 (S.I. 2010/2939), arts. 1, 2(1) (with art. 2(2))