Freedom SIPP finally wound up by HMRC

Date: October 15, 2009

The company Freedom provider of self invested personal pensions (SIPP) was forced to close business in September last year after an inspection by the Financial Services  Authority (FSA) that found the firm had moved customers funds without their authorisation and without notification of charges deducted from their funds.

After the closure of this business HMRC applied to wind up for the firm to be de-registered of the pension scheme which involves a 40% charge of taxes in all assets, estimated to be worth millions in February last year, Freedom SIPP, held assets of £165m for 350 members. Operating terms and conditions of the company state that any tax liabilities would be pass to its clients.

In a judgement which took months concluding 14th October, HMRC wind up petition was granted by High Court, leaving Freedom SIPP clients with a possible charge of £66m, although actions have been put in line to protect policy holders and the existing members of the firm who will be able to request a transfer of their investment to another SIPP scheme.

The FSA who has a statutory objective of protect consumers with all things finance believes it is in the best interest for scheme holders to be placed in hands of a liquidator. The FSA will continue to liaise with HMCR and the liquidator, who has not been announced yet. Meanwhile Freedom SIPP members are advised to seek for professional advice to investigate their best options. Hargreaves Landsdown head of pensions research, Tom McPhail comments “"Investors are being confronted with the possibility of losing 40 per cent of their retirement savings through no fault of their own. This, on a personal level, is just as catastrophic as many of the final salary scheme failures and Equitable Life and the like that we have seen in recent years. I hope HMRC will treat these people leniently."

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