Can HMRC seize your pension?

purplebanna

If HMRC believe you owe them money and they take everything you have, can they seize control of your pension too?

Looking for facts, legislation and sources please, not speculation.

enator

They have several ways to skin you alive, but there seems to be no mention of taking a pension here;


http://www.hmrc.gov.uk/payinghmrc/problems/dontpay/debts.htm

purplebanna

"If you are in Pay As You Earn (PAYE) employment or receive a UK-based pension HMRC can reduce your tax code to collect your debt, if you owe less than £3,000."

I get the impression that the site is a bit vague, still I do wonder. They seem to get more power every day, so it wouldn't surprise me if they could.

ManAtHome

Reducing your tax code would effectively nick payouts from your pension, but not the pension 'pot'.

However, from next April when you will be able to draw as much as you like from the pot, could be much more nickable...

grey_gym_sock

i don't know of any power in relation to pensions.

there was proposal in the budget to give them a new power to take money from ppl's bank accounts. see http://www.taxresearch.org.uk/Blog/2014/03/20/hmrc-cannot-have-an-unfettered-right-to-take-taxpayer-money/

PensionTech

purplebanna wrote: »

If HMRC believe you owe them money and they take everything you have, can they seize control of your pension too?

Looking for facts, legislation and sources please, not speculation.

If you want legislation, the Pensions Act 1995 is a good place to start - section 91 says that the entitlement or right to an occupational pension cannot be assigned, commuted, surrendered, charged or a set-off or lien exercised in respect of it. The exceptions include things like attachment orders and repaying debts to the particular scheme (or the sponsoring employer) but it doesn't allow HMRC to get their hands on it.

If you want speculation: my field is pensions legislation, nothing else, so there might be a piece of overriding legislation somewhere else that allows HMRC to claim underpaid tax from wherever they want - but I would think it extremely unlikely that they can get into your pension assets. Taxing your pension more harshly, if you're already receiving it - well, that's a different thing.

(This is all, of course, assuming that we are talking about an occupational pension.)

purplebanna

PensionTech wrote: »

If you want legislation, the Pensions Act 1995 is a good place to start - section 91 says that the entitlement or right to an occupational pension cannot be assigned, commuted, surrendered, charged or a set-off or lien exercised in respect of it. The exceptions include things like attachment orders and repaying debts to the particular scheme (or the sponsoring employer) but it doesn't allow HMRC to get their hands on it.

If you want speculation: my field is pensions legislation, nothing else, so there might be a piece of overriding legislation somewhere else that allows HMRC to claim underpaid tax from wherever they want - but I would think it extremely unlikely that they can get into your pension assets. Taxing your pension more harshly, if you're already receiving it - well, that's a different thing.

(This is all, of course, assuming that we are talking about an occupational pension.)

Very interesting thank you for sharing.

thenudeone

If you are over the scheme pension age and become bankrupt, the courts can, in certain circumstances, effectively force you to draw your pension to pay off your creditors (which could obviously include HMRC)
http://jcadmin.virtual-studio.co.uk/downloads/library/61/apr12-pensions-and-bankrupty.pdf

If you are insolvent (and of any age), the courts can apply to "undo" any excessive pension contributions with the last 5 years it believes were made with the intention of depriving creditors (again, this could include HMRC) http://hansard.millbanksystems.com/commons/1999/may/17/excessive-pension-contributions-made-by

Andy_L

ISTR reading about bankruptcy cases considing the early availability of a pension (ie at 55+ but with actuarial reduction) as a source of income even if they chose not to take the pension earely

antrobus

Andy_L wrote: »

ISTR reading about bankruptcy cases considing the early availability of a pension (ie at 55+ but with actuarial reduction) as a source of income even if they chose not to take the pension earely

You'd be thinking of Raithatha v Williamson.

I'm not sure what the OP means when they say "If HMRC believe you owe them money and they take everything you have". But if HMRC make a taxpayer bankrupt, and said tax payer is in possession of a pension fund, and is over the age of 55; then yes, they can go after the pension.

purplebanna

Thanks for the interesting reading.

What's to stop someone young (who is about to be made bankrupt by HMRC) put all of their money in a pension, wait for the debt to the be wiped while living off the state and then carry on life normal, and 30 years later start to claim their pension with no payments to HMRC?