• Intend to carry out these functions;
• May be liable to a penalty or prosecution if they make a fake statement.
Worryingly, many member trustees appear to be ignorant of their responsibilities as administrators and therefore appear to be failing in some of their duties.
Regulatory watch
When certain events occur within a SSAS, they must be reported, often to HMRC as a taxable event. The reporting of numerous such events, principally to HMRC, seems to be triggering more in-depth reviews by both HMRC and The Pensions Regulator. A number of providers offer to act as trustee and accept the role of administrator; many of these are increasingly contacted for assistance by orphan SSAS trustees under review or investigation for failures or misdemeanours, many of which were unknown or not understood until the investigation began.
Alongside the removal of a pensioneer trustee, HMRC has had its powers of discretion severely limited. Prior to 2006, if a SSAS misstepped in its reporting or investments, rather than instantly raising a penalty or tax charge, trustees were often given a 90-day period in which to correct the position or remove the offending investment from the scheme. If complied with, the scheme was permitted to continue unpenalised, albeit perhaps with a black mark against it.
Now, no such period of grace exists and under the current regime, once a breach has occurred, a tax penalty will be incurred. Even if the breach is corrected, with no advantage gained by any connected party or without any loss of revenue to the Treasury, the tax penalty will still be owed.
Depending on the breach, a tax penalty might fall on one or more of the founder employers, a scheme member or the scheme itself. Box 1 shows examples of breaches we have been asked to assist with, ranging from a clear misunderstanding of the rules in accumulation to mis-payment of benefits during retirement.
Breaches may also occur in providing the scheme’s administrative functions. Failure to provide annual member statements – or lifetime allowance statements where benefits have come into payment – is a breach of duties, as is the non-deduction and accounting for tax due on any benefit payments.
Sadly, in several of these examples, there is nothing to be done but correct the issue and pay any tax or penalty due. This is often a bitter pill to swallow where no intent to err or deceive was evident.
Before the horse bolts
Employing a specialist SSAS practitioner might be regarded as an unnecessary expense, but not doing so could be a false economy.
In the past, some financial advisers may have viewed such an appointment as encroaching on their services, as some practitioners do offer additional consultancy/advisory and investment services. However, with the RDR now in place, there are clear roles for advisers to fill and be remunerated for. These include:
