Email to Michael Bridges, Compliance, HMRC from Angie Brooks, ARK Class Action – re pension liberation loans.
11 November 2015
Dear Mr. Bridges,
Re: Pension Liberation “Loans”
Thank you for calling me yesterday and for discussing the various aspects of the pension transfers and “loans”. Some important points arose from our discussion, and I feel it would be valuable to get these recorded and addressed.
The first issue was whether any of the members/victims ever asked their existing/ceding providers if they could provide a loan. It has never occurred to me to ask this question so – by copying in a number of members to this email – I am reaching out to ask them this specific question:
“Did you ever ask or consider asking your original pension provider – e.g. Standard Life, Aviva, Royal Mail, NHS etc. – whether they could provide a loan?”
If I get any replies I will let you know. I suggest the answer will be a resounding “no” – but rather than assume the response I will leave it to the experts, i.e. the victims themselves, to answer this question. (I think you will find the answer in the Q10’s anyway.)
How do Pension Liberation “Loans” work?
Victims of different scams were told different things, and the “loans” were structured in different ways. Some were told the loans were repayable; some that they were not repayable; some received elaborate loan documentation; some received nothing. However, the common fact is that they were all told in no uncertain terms that the “loans” were not taxable. Many of the scammers went to great lengths to try to create the illusion that there was no connection between the loans and the transfers and that it was entirely a coincidence that they both happened at the same time.
Elysian Fuels
In fact, in a recently-published case: Elysian Fuels (£240 million now valued at £zero) the participants were told by financial advisers that the 84% “loans” were not taxable and that regulated SIPP providers James Hay and Suffolk Life were fully aware of and “happy” with the “loan” structure. I have copied and pasted the emails outlining this scheme below for your information.
Tax Compliance
The point I am trying to make is that if an “ordinary man in the street” is assured by an IFA, a solicitor and a SIPP provider that a transaction is tax compliant, there is no reason for him to question that assurance. What makes matters worse for the victims (and better for the scammers) is that the vehicles for the scams – whether an occupational scheme, QROPS or SIPP,- are registered by HMRC in the first place. This gives the illusion that there is something “safe” or “approved” about the entire structure and indeed the scammers often use the term “HMRC approved” to dupe the victims.
I have copied James Hay into this email and hopefully – as a regulated SIPP provider – they will come back with some further professional and regulated views on how and why pension liberations/loans/maximising arrangements (or whatever “label” is used to describe the liberation mechanism) are so easy to sell as “tax free” transactions. Hopefully someone at James Hay will be able to provide some enlightening “inside” information and views on the subject.
I could tell that you felt impatient with the fact that so many people believed these various liberation scams were legitimate and tax compliant. With the greatest of respect, I would point out that as you work for HMRC in Compliance, it is your job to be an expert on pensions taxation. But the victims don’t tend to have that knowledge or education and won’t have read Tolley’s Pensions Taxation (420 pages) http://www.amazon.com/
You also pointed out that if there was no loan agreement or contract, then there was no loan. Each scam worked differently, and as far as I can see the only one with a proper, enforceable loan contract was the Evergreen QROPS/Marazion loan scheme run by Stephen Ward from Spain. The word “loan” was merely a four-letter word – sometimes accompanied by the term “non recourse” as in the James Hay/Elysian example below. We could debate “when is a loan not a loan?” all day long, but the bottom line is that the victims were misled and defrauded. In some cases by a government consultant on pensions; and in some cases an added layer of apparent respectability enhanced the illusion that the transaction was safe and compliant by involving FCA-regulated IFAs and SIPP providers.
Another scheme for pension liberation was Salmon Enterprises which worked with the trustees Tudor Capital Management.
All in all, it is a disgraceful state of affairs, and I am afraid HMRC themselves have played their own part in helping facilitate these scams for the past five years – resulting in ruin for many thousands of victims while lining the pockets of the scammers.
Regards, Angie
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MIS SOLD PENSION TRANSFER
ELYSIAN FUELS
CONTACT NUMBER 07711112087
Mis Sold pension transfer
Elysian Fuels