Freedom SIPP investors face £66m tax bill after court action
Freedom SIPP clients need a new home for their cash after the company was wound up in the High Court following an action by HM Revenue and Customs over a VAT dispute.
Now, the firm’s 350 SIPP pension investors need to transfer their money to another scheme.
They are also waiting anxiously for HMRC to tell them whether the scheme has automatically been de-registered that attracts a 40% charge on the fund’s assets - thought to be a payment of about £66 million in tax.
Freedom SIPP terms and conditions state that the fund members are liable for the tax.
Freedom clients have been free to transfer assets but claim the company has put obstacles in the way - and they now have to find homes for their pension funds.
The Financial Services Authority said: “The Freedom SIPP has today been wound up in the High Court on a petition issued by HMRC for non payment of tax. The FSA supported this action in line with its statutory objective to protect consumers. The FSA believes it is in the best interest of Freedom SIPP scheme members for the Freedom SIPP to be placed in the hands of a liquidator.
“Following the winding up the FSA will continue to liaise with HMRC and the liquidator. Members will still be able to request a transfer of their investments to another SIPP scheme.”
Freedom SIPP has been closed to new business since September 2008.
The FSA has issued supervisory notices preventing the release of funds without consent from members.
Scheme members have received letters advising them to seek financial and legal advice following the issue of the winding up order.
The investors have a more or less straightforward choice - either transfer their funds to another UK pension provider or, if they live abroad, to a QROPS scheme.
HMRC refuses to comment on the 40% deregistration tax charge on the Freedom fund assets
“Our legal obligation to maintain customer confidentiality means we are unable to offer comment on the tax affairs of named individuals or organisations under any circumstances,” said an HMRC representative.
