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5:04 pm, October 14, 2009
Freedom SIPP administrator wound up

By Michael Fahy

Freedom SIPP Ltd, the Ramsbottom-based company which administers self-invested personal pensions on behalf of its clients, has been wound up following a hearing at the High Court in London.

The winding-up took place following a petition presented by Her Majesty's Revenue & Customs (HMRC), to whom the company owed VAT of around £160,000.

Clients of the firm fear that HMRC will now look to de-register the Freedom SIPP scheme which the company administered. If it does, they could be liable to pay 40 per cent tax on any assets in the scheme – representing a combined tax bill of £66m based on the £165m-worth of assets that were in the Freedom SIPP in February 2008.

However, Paul Davies, a partner at Manchester-based law firm Lane-Smith and Shindler, said the news that the company had been wound-up does not necessarily mean that clients with assets in the SIPP will be forced to pay 40 per cent tax on assets.

“Just because the petition has been granted doesn't mean the company will cease to exist straight away,” he said. “It's true that once you no longer have a registered administrator a scheme is no longer registered, but we've been assured that HMRC will give clients time to move their assets.

“They are being reasonably sporting, but clients are relying on the goodwill of the revenue.”

When speaking to Crain's last month, the scheme's trustee, John Quarrell, admitted that his company did have an outstanding VAT liability, but he argued that he had been unable to determine how much because regulators from the Financial Services Authority had only just returned files after holding onto them for several months.

He insisted that “the money is there” to pay any outstanding liabilities and blamed “the incompetence of the regulators” for the situation ending up in the courts.

Crain's contacted HMRC, but no-one was available for comment.

COMMENTS? mfahy@crain.com