Explanatory note

This Order makes three distinct changes to legislation relating to pension schemes.

Article 2 makes provision for the first change. It amends the Finance Act 2004 (“FA 2004”) to give Her Majesty’s Revenue and Customs^f1 (“HMRC”) the power to withdraw the registration of a pension scheme where the scheme administrator has failed to provide information required by HMRC under Part 1 of Schedule 36 to the Finance Act 2008 (“FA 2008”).

Schedule 36 to FA 2008 contains the information and inspection powers available to HMRC. Paragraphs 34B and 34C contain specific provisions in respect of information notices relating to pensions matters. Upon those paragraphs entering into force on 1 April 2010, the provisions relating to pension scheme information notices in Part 4 of FA 2004 were repealed^f2. As a consequence, the power to withdraw the registration of a pension scheme on the grounds of failing to provide required information is updated to include a failure to comply with an information notice made under Part 1 of Schedule 36 to FA 2008.

Article 3 makes provision for the second change. It amends FA 2004 in consequence of amendments made to it by the Finance Act 2011 (“FA 2011”).

Schedule 36 to FA 2004 contains modifications to Schedule 29 to FA 2004 which determine how the permitted maximum for a scheme specific lump sum is calculated. Paragraphs 8 and 11 of Schedule 18 to FA 2011 amended these modifications to ensure that the permitted maximum was not reduced when the lifetime allowance was reduced. Those amendments deleted the definition of CSLA from the modifications even though CSLA is still used in the calculation of the permitted maximum. Article 3 re-establishes the definition of CSLA.

Article 1(3) provides that Article 3 has retrospective effect from 6 April 2012 (when the amendments made by FA 2011 came into force (Schedule 18, paragraph 13)). Section 282(A1) of FA 2004 provides that orders made under Part 4 of that Act may include provision having effect in relation to times before the order was made if that provision does not increase any person’s liability to tax.

Articles 4 to 8 make provision for the third change. They make amendments in consequence of Schedule 24 to the Finance Act 2007 (“FA 2007”) and Schedule 40 to FA 2008.

As a result of the introduction of Schedule 24 to FA 2007 and Schedule 40 to FA 2008, the penalty in section 260(6) of FA 2004 is redundant. Article 5 repeals section 260(6) and the connected provision in section 260(7) of FA 2004. Articles 6 to 8 make consequential changes to secondary legislation. As a consequence of the amendments in respect of section 260 of FA 2004 provided for by Articles 6 and 7, it was also incidentally necessary to remove and re-insert references to Schedule 55 to FA 2009 in the secondary legislation.

A Tax Information and Impact Note covering the change provided for by Article 3 was published on 9 December 2010 alongside the draft legislation for Finance Bill 2011 which became Schedule 18 to FA 2011 and is available on the HMRC website at http://www.hmrc.gov.uk/thelibrary/tiins.htm. It remains an accurate summary of the impacts that apply to Article 3.

A Tax Information and Impact Note has not been prepared for the remaining Articles in the Instrument as they contain no substantive changes to tax policy.