Investors are facing a £66 million tax bill if their pension provider is wound up in court next week.
Freedom SIPP (self invested personal pension) is in dispute with HM Revenue and Customs over outstanding VAT payments.
If the court approves the HMRC application, Freedom SIPP will be wound up triggering a 40% tax charge on all assets held by the company – that are mainly client investments.
The company, based in Bury, holds £165 million in investments for 350 clients.
The firm stopped taking new business in September 2008.
The Financial Services Authority also altered the firm’s standing after finding Freedom moved client money between funds without approval and failed to notify customers of charges deducted from their funds.
Act fast to avoid the tax charge
To avoid the tax charge, clients need to transfer their funds away from Freedom to a new SIPPs immediately, or if they have UK pension rights but live overseas, a QROPS.
If another regulated SIPP company took over Freedom as an administrator, clients would also escape tax charges.
HMRC refused to comment on the court case or the consequences of a wind-up.
An FSA spokesman says: “We have made customers of Freedom SIPP aware of this court case and its implications and have urged them to consider their options.”
A statement on the Freedom SIPP web site reads: “During the recent visit by the FSA it was agreed that certain additional administrative procedures needed to be implemented.
“We have volunteered to accept no new members until the changes required have been implemented. We will keep you informed and in the meantime we can assure you that your funds continue to be held as before.
“Freedom SIPP can confirm that we are working hard to ensure that, while the asset requirement persists, member transactions continue unaffected so that members do not suffer any prejudice. We can confirm that all members monies are secure and all standing orders will be actioned.”
