HMRC is about to start collecting tax charges against a group of people who followed recommendations given to them by financial advisers to transfer their pension scheme benefits from one occupational pension scheme to another. This was common practice at the time, and no one batted an eyelid because the receiving schemes were both HMRC and TPR registered.

The problem is what those schemes did and why they were set up in the first place – to allow people to access their pension savings early. This was not permitted and doing so meant a heavy financial penalty to the scheme and to the individual members.

Pension liberation was a known thing to HMRC and TPR at the time, but there was no guidance to ceding schemes and no guidance whatsoever to scheme members. Even when it was known that something was wrong, authorities did nothing to prevent people falling victims to the silver-tongued advisers, who made off with people’s life savings. A great wrong was done to around 1,000 pension scheme members. This was part of the motivation to create the Pension Scams Industry Group in 2014 and to produce the Code of Good Practice on Combating Pension Scams in 2015, which clearly set out how to spot and deal with transfers to scam arrangements. However, there was no such guidance in 2010.

Another great injustice happened shortly after the misappropriation of pension scheme assets, and this was HMRC levying protective claims for unauthorised payment tax charges against the victims of the liberation fraud. Tax law prescribes charges of 40% on unauthorised amounts received or eligible to be received, plus a surcharge of 15%. This high rate was to discourage people from accessing funds early (presuming they were aware of the rules of course!). Now don’t get me wrong – the tax charges are valid where people broke the rules on access to pension funds early, but it was not clear at the time that the rules had been broken and HMRC has spent more than 10 years since, trying to work out what is due in tax charges. During that time, the estimated charges had interest added to them at the statutory rates. Today, those estimates of liability have virtually doubled due to the interest additions.

Well, I hear you say, those people did a wrong thing. You may even agree with HMRC that they were trying to evade tax by doing what they did and deserve to be punished. We do need all the tax we can get to plug the fiscal black hole.

However, if you meet any of these victims, who are now over normal retirement age with no pension to fall back on, you cannot help but be moved by their stories. These are not sophisticated investors, they are working people, including nurses and firefighters, who are at their wit’s end trying to make ends meet and dreading the brown envelope landing on the doormat with the final demand for tax. They are driven to despair by the unfairness of it all – they were not aware of what the advisers were up to; they trusted the system and feel let down, for over 13 years in some cases.

Well, this month brings a reckoning. HMRC is poised to start issuing those final brown envelopes. The good news is that the door has opened a crack, and they are interested to hear how they can make the collection of the tax less painful. I will be reminding them tomorrow that their customer charter requires them to be fair and to take into account individual circumstances but also the public interest and proportionality of their tax demands.

While HMRC is legally correct to levy tax charges for rule breaking, we must all question whether collecting tax which arose solely because of third party dishonesty, which has taken over a decade to calculate, and which has taken a huge toll on victims’ lives can possibly be in the public interest. Could the rate charged be reduced? We are talking about a tax take of around £20 million for all those known historical cases, which is small beer compared to the harm done to both the victims and the economy already.

I look forward to my discussion with HMRC tomorrow and hope I can report a positive outcome. It’s about time for some good news in this long campaign. If there is no breakthrough, I will be launching a petition to raise public awareness of this scandal. With enough support, we can force a parliamentary debate on the issue. I would hope I can rely on each of you to sign it and show solidarity for our former pension customers.

Margaret Snowdon, Chair of PSIG