“What the market needs is clarity from HMRC as currently as a precaution no one is accepting in specie contributions. Either HMRC should be clear and arrange amended legislation so that they are or are not clearly acceptable. If they are, there should be no restriction as to what assets can be accepted provided they can be accurately and fairly valued.”
Mr Tilley warned that in-species contributions should “absolutely not” be banned as anything that will make it easier for individuals to save into a pension should be encouraged.
“We believe that individuals and companies who are asset rich, but liquidity poor should not be penalised for having to sell down assets to cash to pay contributions only to buy them again and incur losses as well as incur potential market risk issues.”
Greg Kingston, head of product and insight at Suffolk Life, said that the problem of improperly valued assets is an issue that HMRC must address across various areas of the financial services industry, and that a joint effort between providers and regulators is to find a thorough solution to the problem.
“If HMRC is concerned with inaccurate or variable valuations of certain assets then this should not be limited to claiming tax relief for in specie contributions: they would naturally also be concerned with benefit crystallisation events and the risk of ‘overpaying’ tax free cash.
“A consistent, joined up approach is needed, and what HMRC really need to do now is openly engage with the industry and work toward clarity.”
julia.faurschou@ft.com
