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 2014, HM 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.”