HMRC to deliver 'a devastating hammer blow' to pension scam victims

Marina Gerner
26 January 2016

ACA Pension Life, a nationwide campaign group set up to speak up for victims of pension liberation scams, says those affected by scams are about to face a severe setback.

The warning from Angela Brooks, chairperson of ACA Pension Life, comes as the UK tax authority prepares to issue so-called protective assessment letters.

HMRC assessments that are made shortly before a time limit expires (in this case four years after the event that triggered the initial tax liability of 55 per cent) are commonly called 'protective assessments'. They are intended to protect HMRC's position by keeping the matter open until enquiries and appeals are completed.

However, says Brooks, 'in reality, they are "demands", and if they are not appealed within 30 days they cannot be appealed - and if the poor victim doesn't know this they are stuffed!'

Hammer blow

A number of pension scams have been promoted since 2011, according to Brooks. Websites and newspaper ads with names such as 'cash for your pension' have claimed that people could access their British pensions tax-free and before the age of 55 due to a legal loophole.

Brooks comments: 'Many innocent victims of pension liberation scams, the majority of whom have lost their entire lifetime savings, are now about to be dealt another devastating hammer blow - and this time it's from HM Revenue & Customs.'

When it comes to the people affected by such pension scams, Brooks suspects the total number of people may exceed half a million.

'HMRC is imminently to send out its next wave of protective assessment letters to victims, with tax demands of a staggering 55 per cent,' says Brooks. 'This is the horrific fate that awaits many. It will ruin lives.

'It means not only have these victims almost certainly lost their hard-earned retirement savings, but now they will owe HMRC a huge amount of tax.' She adds: 'In addition, most also face other crippling debts and loans.'

ACA Pension Life has taken several steps to campaign for victims of pension scams. 'We have, through the victims' MPs, asked the government to help existing victims and work with us to help prevent future victims,' says Brooks.

Read 'Three words that could lose you your pension' here.

Out of control situation

'This has had limited success as the government is reluctant to admit that the situation is totally out of control, and that neither the regulators nor the police are effective.

'The chair of the Pensions Select Committee, Frank Field, has not admitted that pension scams are on the increase - especially since the government's ill-thought-out "pension freedoms" introduced in April 2015 - and is assuring the public that [the PWC is] "keeping an eye on the situation".'

ACA Pension Life has asked both the government and HMRC to agree an amnesty for victims of fraud, but Brooks says this has been refused on the basis that it would '"send the wrong message" to those who deliberately liberate their pensions, fully aware that they were doing something which was not compliant with HMRC rules'.

Brooks argues that she has never come across such a person, and therefore that it is unlikely that anyone would ever do such a thing deliberately in the full knowledge that there would be 55 per cent tax to pay.

'We have made complaints to the Pensions Ombudsman and are awaiting their response. We have made complaints to the ceding pension providers (for example Standard Life, Aviva, Prudential, Royal Mail) and they have all, so far, denied they were negligent in handing over thousands of victims' pensions to obvious scammers,' she says.

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