If a member of your pension scheme has been affected by the public service pensions remedy, you may need to offer them compensation if they’ve overpaid the following:

• annual allowance tax charges
• lifetime allowance tax charges
• unauthorised payments tax charges

If a member has claimed compensation, HMRC will send you information about the member’s compensation submission.

Compensation can be paid where tax cannot be reclaimed from HMRC, which is tax years in the remedy period before the tax year 2019 to 2020.

What happens when HMRC receives a compensation request

When a member makes a submission for compensation through the calculator, HMRC may complete some checks against the information held on HMRC systems.

After checking the information, HMRC will pass on the details of the claim, including any differences identified in the amounts reported and paid.

If the member has an annual allowance or lifetime allowance tax charge originally reported by multiple schemes, we will only send information to the schemes that originally reported the charge, except where the scheme is a private sector pension scheme.

What information we will send to schemes

Once HMRC collectcollects all of the relevant information, wewe’ll will send it to you through the SecureTransfer Datafiles Exchangesecurely Servicewith (SDES).HMRC Youservice. willYou’ll need to download the file within 6 calendar days,days — after that time it will be deleted from your SDES account.

The information we send could include:

• the members personal details (for example, their name, date of birth, National Insurance number, address and contact details)
• if someone is claiming on behalf of a member, the claimant’s details, (for example, their name, date of birth, National Insurance number, address, contact details, and what capacity they are acting on behalf of the member (a deceased member or someone who lacks legal capacity))
• if the submission is an amendment to a previous submission
• the legacy or new scheme reference number to identify the member

We will also send at least one claim for compensation for the tax years between and including 2015 to 2016 and 2018 to 2019 for either:

• annual allowance, this will include:
  • the amount claimed
  • any discrepancies between the amount claimed and information held by HMRC for all the years of the claim
  • who paid the original charge
  • an error code if there is a discrepancy for the years claimed
• lifetime allowance, including the amount claimed
• unauthorised payments

We will also let you know who originally paid the tax for the relevant tax year the member is claiming compensation for. This will show as either:

• direct — tax which was reported and paid by the member through self-assessment
• indirect — tax which was reported and paid on an AFT (Accounting for Tax) return by the scheme administrator

Members with multiple schemes

If a member has multiple schemes (including private sector schemes), HMRC will review the total amount of the member’s original annual allowance or lifetime allowance tax charge previously reported.

Where the charge was paid by multiple public service pension scheme administrators, we will send the information to all scheme administrator who originally paid the tax. We will apportion the claim between the schemes based on the percentage of the total originally paid by each scheme administrator.

Where a member originally paid some or all of the tax, they will tell us in their claim which public service pension scheme they want to pay the compensation. This can be paid directly to them.

Example of 2 schemes paying an annual allowance charge

A member had an annual allowance charge of £5,000 in the tax year 2016 to 2017 which they asked 2 schemes to pay.

Scheme 1 paid £2,000 (40% of the charge) and scheme 2 paid £3,000 (60% of the charge).

As a result of the remedy, the member’s total tax charge was reduced to £3,000 with the member claiming £2,000 for compensation.

This would result in a claim of £800 (40% of £2000) in compensation to scheme 1 and a claim of £1,200 (60% of £2000) in compensation to scheme 2.

Error codes for discrepancies in information

Where there is a discrepancy in the information the member has provided and our records, we will:

• let you know the amount of difference
• assign an error code for the claim

The error code will explain the difference found in the submission and our records.

Error Code	Description of the difference	Direct or indirect payment
A	Reported and fully paid on AFT, not reported on Self Assessment	Indirect
B	Reported on AFT and Self Assessment, payment outstanding	Indirect
C	Reported on Self Assessment but not on AFT and payment outstanding	Indirect
D	Discrepancy between claim and reported amounts on AFT and Self Assessment	Indirect
E	Discrepancy between claim and reported amounts on AFT	Indirect
F	Charge reported and paid by another scheme	Indirect
G	Not reported or paid on Self Assessment	Direct
H	Reported on Self Assessment, payments outstanding	Direct
I	Discrepancy between claim and reported amounts on Self Assessment	Direct

After you receive the information from HMRC

You have discretion to pay any amount of compensation due to members when they have been financially impacted as a result of the remedy.