HMRC are now sending out the tax demands (protected assessments) to victims of the Axiom UPT Pension Loan Scam. And we are busy appealing them.
I have tried to contact Rex Ashcroft of Wealth Protection International to ask him what he intends to do to help the victims who were introduced to this scam by him, but he doesn’t answer the phone and doesn’t return my calls.
I have also emailed him and some of the other parties involved in this scam and we will see whether any of them get back to me. This is how Rex Ashcroft described the liberation mechanism to the victims:
John Vermunt has passed your details to me to provide you with the information you need to understand and proceed with accessing the value of your pension.
This email introduces you to a device called an Umbrella Pension Trust into which your existing pension is transferred, so that pension rules which are outside the scope of the business and commercial model that the day to day providers of pensions use, can be taken advantage of to restructure the way in which the assets within your pension pot are used, invested and managed in the future.
In short, you and the Umbrella Pension Trust’s Trustees are able to make and take decisions about how to use the money in your pot that is no longer subject to the restrictions and penalties imposed by pension regulations applying to the pension in its present format.
This mechanism has been in use now for nearly 20 years in one form or another and has until comparatively recently been reserved for the use of people with pension pots of a value in excess of £250,000 which is the reason why so many accountants and financial advisers have never heard of this way of restructuring pensions; the other reason of course is that 99% of the time financial advisers and the like simply need to provide a tax advantageous savings plan which enables their clients to salt away money that will generate an income for them when they retire, so sophisticated ways of handling such savings plans (pensions) like the umbrella pension trust are simply not required or within the scope of their day to day activities.
As with all financial transactions, the restructuring has to be done by appropriately qualified and regulated individuals but at the end of the day you must be aware that your pension remains a pension – you are not “cashing in”, “selling” or “borrowing against” your pension, you are simply executing transactions with your pension pot using a different set of rules. The umbrella pension trust is most definitely NOT a so-called Pension Liberation Scheme.
Your pension pot, under your control, continues to be maintained as a tax-free investment vehicle but the difference is that such investments are not restricted in any way as they are at the moment; a loan is an investment of course so if your pension lends you some money this is not income and therefore not taxable as income, so using this useful fact you can obtain “lifestyle support” from your pension by having cash in hand via loans to yourself.
Such loans are simply renewed at the end of their term and the original borrowed sum plus the interest that has accrued to it over the term of the loan are recreated as a new loan, and so on until you die. If your estate is valuable to the extent of being liable to inheritance tax then such accumulated loans can be used to reduce your estate value and thus the inheritance tax that might be due. The Trust “sequesters” or takes asset value from your estate in repayment of the debt you have created and this passes that asset value into the protection of the trust for the tax-free use of your beneficiaries; so they do not inherit asset value that then causes them a tax problem, instead they have the use of the asset you would otherwise have bequeathed to them completely tax free through the trust. If there is insufficient value in your estate to repay all the debt you have created then because English Law states that debt cannot be inherited the trustees simply write the debt off.
The Trustees of the Umbrella Pension Trust need to be outside the UK so they have the advantage of the necessary tax exemptions and Bay Trust in Belize is used, a firm that I have coincidentally personally used for a number of years now, they are friendly and efficient even if they are 5 hours behind us and have much better weather than we do!
We will try to jolly things along for you as best we can but because so many different stages of the process rely on so many different people it is most times impossible to actually give an answer to “how is my pension restructuring progressing”.
The fact will be though that it is indeed progressing and will take as long as it needs to take in order for it to be right within the law.
As I have already mentioned above somewhere, because restructuring in this way maintains your pension as a pension this exercise cannot be argued to be a so-called “pension liberation scheme” and nor does it attract a 55% tax bill by creating what is known as an “unauthorised payment”, so if you talk to anyone about what you are doing please do not be put off by negative comments like “that is rubbish you cannot cash in your pension before you are 55”, simply say that you are NOT cashing in your pension, say that your pension remains a pension and its asset value remains intact (which it does because a loan is an asset of the pension) and that you can restructure your pension in this way at any age so long as you are no longer making contributions to that pension.
OK, that’s it. If you have any questions the please call or email me.
Rex Ashcroft
Director
Wealth Protection International Limited and Tax Strategies Website and Spanish Inheritance Tax Website
Umbrella Remuneration Trust Website and Umbrella Pension Trust Website
Direct: +44 1263 821906 Mobile: +44 7834 393899
London: +44 2081 446677 Manchester: +44 1614 080920