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Pensions Alert: Update on requirements under anti-money laundering legislation

Key points

  • In June 2017, new money laundering regulations came into force which require trustees:

  • of schemes that are liable for certain taxes, to register with HMRC, and provide information to HMRC;

  • of all schemes to:

    • keep records about beneficial owners of the trust; and

    • disclose information about beneficial owners to law enforcement agencies (including the Financial Conduct Authority, National Crime Agency and HMRC) on request.

  • When the regulations first came into force, it was unclear how the legislation applied to pension scheme trustees.

  • HMRC has circulated draft guidance which clarifies that pension scheme trustees need to register with HMRC if a scheme is liable to pay certain taxes (see below).  The deadline for registration is 31 January 2018 but HMRC has extended this deadline to 5 March 2018. 

  • The guidance also provides some clarification on the information that needs to be kept, and provided to HMRC, about beneficiaries.

  • Trustees found to be in breach of the regulations could face criminal and civil penalties.

  • Employers could face reputational issues if trustees of their pension scheme(s) are found to be in breach of the legislation so employers should consider engaging with pension scheme trustees about the steps being taken to ensure compliance.

Registration deadline

Trustees of pension schemes will need to register with HMRC where the scheme incurs a liability to pay certain taxes in relation to scheme assets or income.  These taxes include income tax, stamp duty land tax, land and building reserve tax.

Trustees of pension schemes that are already registered for self-assessment and incurred a liability to pay any of the taxes specified above in the tax year 2016 – 2017 must register with HMRC by 31 January 2018. HMRC has however confirmed that it will not impose a penalty if trustees register with HMRC between 31 January 2018 and 5 March 2018.

Note that trustees of pension schemes that are not already registered with HMRC for self-assessment purposes and incurred a liability to pay any of the taxes specified above for the first time in the tax year 2016 – 2017 must register with HMRC by 5  January 2018.

Information about beneficiaries

HMRC has also confirmed that if a scheme has a class of beneficiaries, not all of whom have been determined, trustees can provide a description of that class to HMRC (for example, a description of categories of dependents who may receive a pension on a member’s death).  However, HMRC has also clarified that once a beneficiary of a class receives a benefit from the scheme, the trustees will need to provide further details of that beneficiary, including the beneficiary’s name, date of birth and NI number or passport details, to HMRC using HMRC’s Trust Registration Service.   

Further information

For further information about the requirements under the legislation, please see our updated alert below.

Pensions alert - update on requirements for pension scheme trustees to keep records under anti-money laundering legislat
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