Poor old HMRC - grab your relief and move onto the next

At a recent meeting between AMPS and HMRC, there was concern expressed by
HMRC that the 50% borrowing rules may be being circumvented. In particular they
described a process where, for example, a £100,000 sum within a SIPP secures
£50,000 borrowing. The original £100,000 is then transferred to another SIPP leaving
behind the original borrowing and a further £50,000 borrowing is taken, and so on.
The AMPS committee is not aware of any such practice occurring but have agreed to
pass on the following words of caution from HMRC:
“Should HMRC see arrangements being put in place to attempt to circumvent the
rules on scheme borrowing we will look very closely at these and are prepared to
apply tax charges and be diligent in considering a wide range of arguments against
them. Any such arguments would be based on the facts and circumstances of each
individual case and it would therefore be difficult to provide any blanket assurances
in this area.
The Government has made clear that, in proposing the generous and flexible new
regime, they will not countenance use of the pension tax reliefs towards purposes
other than the one for which they were intended. Ministers would take very careful
note of schemes which seek to divert the purpose of the new regime.”

posted by Chris Read @ 14:49