One-third of small self-administered schemes have yet to adopt A-Day reforms and face a 40 per cent tax charge and deregistration if they fail to implement the rules by next April, warns Hornbuckle Mitchell.
In April 2006, the Labour Government brought in a series of fundamental changes which were designed to simplify pension tax rules.
A single tax regime was introduced to replace the previous eight and schemes were given five years to comply with the reforms.
With the deadline for compliance now less than five months away, Hornbuckle Mitchell director Mary Stewart believes that around a third of Ssass have yet to adopt the changes that need to be in place by next April.
She says employers running “orphan” SSASs are less likely to have made the necessary arrangements to comply with the new rules.
Failure to adhere to the rules once the deadline has passed could see schemes incur a 40 per cent tax charge on the market value of scheme assets and face deregistration.
Members of a non-compliant Ssas could be subject to restrictions and tax charges on their contributions, retirement options and final benefits.
Stewart says: “Since A-Day, an awful lot of Ssas administrators have resigned from the market, so there are a lot of orphan Ssass out there which do not have a professional trustee or an administrator.
“A lot of people do not realise they have got these obligations and that they have got to comply with these rules or face deregistration or heavy tax penalties.
“We have found that, with requests for transfers in that we have had, about a third are not compliant.”
Worldwide Financial Planning IFA Nick McBreen says: “For a lot of firms, trading has been difficult since A-Day and they have focussed on other things, so this could come back and bite them. It is a problem where companies look at the benefits of a scheme like an SSAS but do not review them as often as they should.”