Entrepreneur Ivan Massow, fresh from launching his new venture which aims to refund 'unearned' trail commission to retail customers, said he is confident the process does not fall foul of HMRC tax rules where it involves pension plans.
Advisers said refunding commission to clients from a pension plan would likely be treated as an 'unauthorised payment' by the UK's customs and tax department, resulting in a minimum 40%, and possible 55%, tax charge.
But Massow said as no 'new' commission is being generated and the rebate is purely a 'commercial arrangement', he has confirmation that the rules do not apply.
His new business - paymemy.com - launched yesterday. It allows clients who discover they are paying renewal commission but receiving nothing in return to apply to get 80% of any future payments rebated to them.
All customers need to do, Massow said, is switch servicing agent to his company and let it track down and refund the money, although it will keep 20% for its efforts.
Advisers have questioned his overall objectives and approach, but specifically they argued it was unlikely HMRC would permit such payments from pension schemes without levying a charge.
But Massow said his company is "simply collecting an ongoing expense" which was due to the original adviser regardless, and rebating this where the amount is disproportionate to the work it undertakes.
He added he had been told by HMRC that, as the unauthorised payment rules had been set up to prevent policyholders setting up pension schemes where they receive a large kickback in commission at outset, his offering was exempt as it did not seek to, or achieve, this.
A spokesperson for HMRC said: "Whether or not rebates of commission in respect of a pension scheme would be authorised payments would depend on the facts of the case and in particular whether the commission can be treated as scheme administration payments.
"Upfront adviser charges paid out of a registered pension scheme as commission or as fees are likely to be treated as scheme administration payments. This will also be the case in respect of adviser charges for ongoing advice.
"But the payments will be unauthorised payments if the arrangements they are paid under are not wholly commercial or if the costs are not just for pension advice about the particular pension scheme."
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