NEWS   |    March 18, 2024

Ben Fairhead gives evidence at Work and Pensions Committee session on pension liberation scams

As part of the Work and Pensions Committee’s inquiry into Norton pension schemes and the Fraud Compensation Fund, an evidence session was held regarding pension liberation scams on 13 March 2024.

Partner Ben Fairhead was invited to give evidence at the session, held at Westminster, together with Dalriada Trustees senior trustee representative, Sean Browes.

At the evidence session, Ben explained that many large-scale occupational pension schemes had been set up in the early 2010s and used to facilitate pension scams. Legislative changes have been made since then to make this much more difficult, but there have been many victims of scams in the meantime.

He further noted that much work has been done by the Pensions Regulator and professional trustees like Dalriada to address the consequences of these scams and seek, as far as possible, to achieve redress for victims. However, the inquiry is showing that there have been real challenges along the way, and many victims still face uncertainty and the risk of tax charges.

Commenting on whether he had ever seen HMRC exercising discretion in cases such as the Ark Pension Schemes case, Ben said: “No, I don’t think so. The way it’s being applied is inconsistent and quite unfair.”

“Sean mentioned the Ark schemes that went through a full tax tribunal process. The payments the members received for those schemes were quite transparent, weren’t concealed at all, the members were all under the impression it was done in an above-board way.”

“The way that’s being approached doesn’t feel very logical to somebody standing back from it and seeing how the members have been taxed. They haven’t been taxed on the payments they’ve received; they’ve been taxed on a payment they’ve notionally made to somebody else.”

“So, you end up with, in itself, what looks like quite an unfair outcome.”

Ben added that there was “very little prospect” of HMRC pursuing the tax charges across the board in a consistent way.

“I don’t know what the figures are, but I doubt we are talking enormous sums in the greater scheme of things, bearing in mind there is quite a lot of cost in pursuing it.”

“And I don’t think there’s any precedent value now, because these types of schemes really shouldn’t be happening anymore.”

“So, the fear that they might have had 10 years ago about letting members off the hook and encouraging more schemes like this to be set up, I just don’t think that’s a good argument anymore.”

Read Ben’s comments in Pensions Age, here.

View the full session, here.

The views in this article are intended for general information purposes only and should not be used as a substitute for professional advice. Arc Pensions Law and the author(s) are not responsible for any direct or indirect result arising from any reliance placed on content, including any loss, and exclude liability to the full extent. Always seek appropriate legal advice from a suitably qualified lawyer before taking, or avoiding taking, any action. If you have any questions on the points raised in the above, please do not hesitate to get in touch.

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