The misery goes on as pension liberation victims face hefty tax bills
n I ask Angela Brooks, chairwoman of Pension Life, about the effects of UK pension liberation scams on their victims, I am shocked by her answer: “There have been suicides. There have been nervous breakdowns, strokes, heart attacks and broken marriages. The misery that victims live with every day of their lives is unbearable.”
Pension Life seeks help for hundreds of financially-vulnerable clients who were assured that they could access their pensions before the age of 55 without tax liabilities. They are men and women, Brooks tells me, who were hit hard by 2008’s financial crisis: “People were trying to save their homes and businesses. There were an awful lot of people who were ripe for this scam.”
Pensions accessed before the age of 55 are often called “loans” by the perpetrators of this kind of fraud, but they are simply “unauthorised payments” in the eyes of the British tax authority HMRC, taxable at a penal rate of 55 per cent.
World-renown pensions expert Stephen Ward - a former government advisor and author of a highly-regarded manual called ‘Tolley’s Pensions Taxation’ - was one of many professionals who allegedly told clients that their pension loans would not be taxed at this punitive rate as the transactions were “approved” by HMRC and used a lawful tax loophole. The team at Pension Life is fighting to bring legal action against Ward and others suspected of similar activities, as well as appealing the ruinous tax bills that result from them.
Brooks is a former tax advisor for the British Taxpayers Association, where she specialised in agricultural and inheritance matters. On what was supposed to be a brief excursion out of retirement three years ago, she was working on one such matter when someone asked her to look at an “Ark” case. “One became two, two became four…. I learned everything from scratch,” she says.
Many of Ward’s clients transferred legitimate, gold-plated pensions into schemes since deemed fraudulent in the 2010/2011 and later tax years - and for these people the worst is still to come. After years of deliberation, HMRC is about to send tax demands to the victims of a large-scale pension scam that is said to have earned its principal architects substantial fortunes.
Pension Life is currently managing the cases of 487 liberation scam victims whose taxable transfers and loans collectively total £30 million (€39 million). One Pension Life member - a British expat living in Spain - will receive a demand for around £250,000 (€321,000) this April.
The 10 per cent of Pension Life’s members who live in Spain “represent a substantial amount in lost pensions”, says Brooks.
Some of these expats chose the Costa Blanca, which was also home to Ward’s firm, Premier Pension Solutions. Starting in 2010, Ward acted as an ‘introducer’, pointing clients to one of six Yorkshire-based pension schemes collectively known as Ark. Ward charged his clients between £1,000-£2,500 per transfer, as well as 2%-5% of the value of the transfer. All the Ark schemes were the creation of another financial expert named Craig Tweedley.
On 31 May 2011, several months after HMRC first aired suspicions about Ward and Tweedley’s activities, the UK Pensions Regulator handed Ark over to Belfast-based Dalriada Trustees. In the four months until it was shut down, £23 million was transferred into Ark. In total, Ward directly facilitated 160 transfers into Tweedley’s schemes.
In November last year, Ark was deemed a pension liberation scam by Justice Bean of the UK High Court, who said it was a “fraud on the power of investment”.
Anger enters Brooks’ voice when she relays this timeline: “HMRC could have stopped it. All they had to do was withdraw their registration and the schemes would have been stopped. Instead, they did nothing.”
Ward’s formidable reputation in the pensions world meant that clients trusted his advice. “He is probably the most internationally recognised expert on pensions and pensions taxation,” says Brooks. “If somebody like that tells you that the scheme he’s about to sell you is bona-fide, tax-compliant, legal and definitely in your financial interests, you are going to believe him.”
English-speaking independent financial advisers (IFAs) proliferate in Spain, most of them based on the Costa del Sol and the Costa Blanca. But Brooks says meticulous due diligence is key when searching for advice; in particular, she recommends checking that an IFA is properly regulated and, if necessary, paying for advice from a reputable UK adviser.
Though Brooks finds it “very, very sad and disappointing” that Ros Altmann, the UK Pensions Minister, has failed to take up the cause, Pension Life’s campaign is gathering momentum. To tackle the “serious and growing problem” of pension liberation scams, she is currently working with an ex-RAF financial adviser in the UK to form a military-style task force joining up HMRC, the Pensions Regulator and the Financial Conduct Authority.source surinenglish