A ‘simple’ arrangement is described in HMRC’s guidance as one where the employer enters into a binding obligation to make a payment of a monetary amount and the pension scheme binds itself to acquire, for a set period, an income stream generated by an asset held by the employer. The current value of the income stream generated by an employer’s asset for the agreed period equates to the value of the pension contribution. The two debts are offset and no cash changes hands. The contribution would normally be treated as paid when the amounts were offset. In essence, the pension scheme is treated as having ‘loaned back’ the contribution to the employer

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