15 per cent. In extreme circumstances the scheme could lose its registered status leading to a 40 per cent charge on the scheme assets (payable by the scheme administrator).
Depending on the nature of the transaction, the scheme member could also be liable for some of these charges. It is easy to see that without a detailed knowledge of the rules, a client can seriously damage their own and their scheme’s financial position.
HMRC’s monitoring role
In response to increasing industry concerns about pensions liberation and associated fraud issues, HMRC has introduced closer checks on brand new SSASs being set up so as to ensure they are being created for genuine pension saving reasons. It is clear HMRC have the scent of wrongdoing by some in SSASs and there is an inevitability of closer scrutiny. And rightly so.
So should HMRC make the appointment of a professional SSAS scheme administrator compulsory?
Yes, but why? Here are four reasons:
Firstly, a significant number of self-appointed scheme administrators do not understand the rules and regulations, and others might be tempted from the straight and narrow by certain conflicts of interests and simply ignore them. In either case, they will inevitably generate tax sanctions.
Secondly, the reporting of “unauthorised payments” comes down to the scheme administrator, which would be an immediate conflict for any client acting in that role to their own SSAS.
Thirdly, tax issues will be avoided. And finally, a professional scheme administrator will be aware of the liberation and fraud issues and be in a position to act to protect the scheme and its members from loss.
Ultimately, HMRC must be confident in the standards of administration of SSASs. The alternative to a professional scheme administrator is possibly increased scrutiny and regulation. While both come at a cost, increased regulation creates a burden for every scheme.
The opportunity for advisers
Check which of your clients have a SSAS. Make sure you know who the scheme administrator is. If it is not an established professional then it is time to review the scheme, membership, and its assets. The more complex the scheme, the greater the risk of errors, so tackle the more complex SSAS first.
Contact a reputable SSAS provider and ask them to carry out a detailed technical review of the scheme. Some providers will carry out this service free of charge.
Work with the provider to identify any potential issues and work through these to find and implement solutions as soon as possible.
Clearly your services in this process will open opportunities for fee discussions. These discussions may, hopefully, open wider dialogue with the client. Many SSASs hold very significant wealth for clients and the value of your advice should stand you in good stead. Agreed client fees could be facilitated from SSAS funds should the member prefer, and the scheme permit.
