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‘No evidence’ HMRC rules are cleaning up SSAS market


SSAS savers are still at risk of tax charges a year on from the introduction of fit and proper rules designed to protect against scams, providers warn.

Since 1 September 2014HM Revenue & Customs has been able to refuse both to register a new  pension scheme and to de-register an existing scheme if the scheme’s administrator is found not to be a “fit and proper” person.

The move was in response to the growing threat of pension liberation from scammers using SSAS to cash out pension savings.

But providers say there is no evidence the new requirements have made an impact.

SSAS specialist Whitehall director Richard Mattison says there could be up to 20,000 “orphan” schemes being run without the help of an expert.

He says: “We all thought the new rules would also be used to clean up the orphan schemes notionally run by the clients themselves. But we’ve seen no evidence of that happening whatsoever.”

If a scheme is deregistered by HMRC it is subject to a 40 per cent tax penalty. Additional charges can also be applied if the tax office finds other issues.

At the time HMRC published a list of factors that could cause it to investigate the suitability of a scheme administrator.

This include whether the administrator “does not have sufficient working knowledge of the pensions and pensions tax legislation”.

Talbot and Muir head of technical support Claire Trott adds: “There has not been the massive influx of cases we might have expected. We just don’t know how many of these schemes there are out there, the figures don’t exist.”

According to a source close to HMRC the fit and proper rules are “one of the most used tools in the arsenal”.

An HMRC spokesman says: “The introduction of the fit and proper person test is an important safeguard in ensuring the pensions tax rules are not abused and work as intended by Parliament.”



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There are 5 comments at the moment, we would love to hear your opinion too.

  1. At Xafinity, we have seen some SSAS clients “re-engage” after a period of “running the SSAS themselves”. Whilst this is encouraging, I agree that there are still hundreds, or thousands of SSASs being “administered” by scheme members who are unlikely to meet the Fit & proper persons criteria. The question is will HMRC ever challenge their knowledge/status for existing schemes?

  2. I agree with Jeff, here at SSAS Reviews we come across a lot of old Schemes where the Members have ended up Self-administering their own Schemes and are desperate for someone to take them over, but after reviewing them, we have to turn most of them away, simply because if we take them over then we inherit liabilities from their mistakes. OK, the rules are in black and white on the RPSM/PTM but without the working knowledge (bearing in mind that the Finance Act 2004 isn’t the only piece of relevant legislation to consider), the poor Members don’t stand a chance of interpreting them correctly, which causes silly errors with huge tax implications.
    I do think that HMRC will get round to reviewing these older Schemes, but are concentrating on the new ones for now. Although we do know of a large number of administration firms which have been effectively struck off by HMRC with their Schemes put under notice, so it is a work in progress.
    The bottom line for me, is that HMRC will need to wait for more resources in order to utilise the Fit & Proper criteria fully and to be an effective ‘Ultimate Regulator of UK Pensions’.

  3. I’m interested in the “large number of administration firms which have effectively been struck off..” I would not expect names to be mentioned on this forum, but this is the first I have heard of a move on this scale. How many? Presumably none of these firms would be AMPS members? Also, there is a mechanism within FA2004 for exempting scheme administrators from tax charges when it would not be “just and reasonable” to impose them (s.268). If it is not available when a “white knight” scheme administrator rides into town, then when is it?

  4. Christine Brightwell 18th November 2015 at 7:43 am

    Comments are noted. And yet there are SASS schemes which are run reasonable by their members/trustees because they take proper advice and act on it. We are in danger of believing misuse of SASS issues include all historical SASS – this is not so.

  5. Hi Mr Johnston, yes sorry, I got a bit carried away with using the word ‘large’ there. I’ve come across three Admin firms so far, no names obviously, but no, none were either members of AMPS or individual Members who were running their own Schemes (so all Scheme Administration Firms).
    I wouldn’t like to rely on s.268 myself, as the liability only stops with the Scheme Administrator at the time of the breach, if either the Courts or tPR appoint a new one (see s.272). I am guilty of being rather cautious, but I would expect HMRC to take the view that the New Scheme Administrator should have carried out significant investigations to satisfy themselves that they weren’t inheriting any existing liabilities, before agreeing to takeover the Scheme. I would only like to rely on s.268 myself, if, as the Scheme Administrator at the time of a breach (but not also a Trustee) I was not made aware of the Trustee’s intentions or directly involved in the transaction causing the breach.
    Hi Ms Brightwell, yes I think you’re absolutely right, but unfortunately they do appear to be in the minority.

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