Anti-Avoidance Rules

The new rules render obsolete all the old tests regarding income and ability to invest in pensions. However, the rules are rigid on two core aspects:-

Unauthorised Payments (to members or others).

This should not present any practical issues as the administrators will prevent any incorrect actions.

Value Shifting

Value Shifting arises when a transaction occurs that serves to pass value from the scheme to a member or connected person. In many cases these transactions are based on inside information not known to the administrators. The vast majority of “cunning plans” that are designed to extract value from a pension scheme, other than by taking benefits, involve Value Shifting.

To prevent Value Shifting, all transactions must be conducted openly and transactions involving members or connected parties will be subject to particular scrutiny. Administrators might well seek additional expert opinions with respect to the price and terms of the transactions. It should be noted that connected party transactions are not actually forbidden, but simply subject to scrutiny.

Legitimate Value Shifting

Legitimate Value Shifting can occur where all concerned parties recognise that a proposed transaction will involve Value Shifting and that there will be a charge designed to compensate for this.

For more information, please contact us.