Regulation  

Ssas administrator hit with £15k fine over £100k loanback

A tribunal has slapped a small-self administered pension scheme administrator with a £15,000 fine, after it rejected an appeal over a £100,000 loan made from the scheme to a trustee that was treated as an unauthorised payment.

The loan was made from the Hesco Military Products Limited Directors’ Pension Scheme to one of its directors, Rory Fordyce, who was then a director of the company and a trustee of the scheme.

Chartered accountant Stephen Willey had been the scheme’s pensioneer trustee prior to A-Day and then became the scheme administrator.

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Mr Willey advised and set up the pension scheme for Hesco Military Products Ltd in June 2006. In August 2006, the payment of £100,000 was notionally allocated against Mr Fordyce’s entitlement under the scheme.

The scheme trustees intended the payment as a loan, which was paid to a separate company that Mr Fordyce had set up after he left Hesco.

HMRC classified the payment as ‘unauthorised’ - a view which was not challenged - there were no written loan agreements and no security for the loan. The scheme’s trustees said they were not aware such criteria had to be met.

The transaction itself resulted in no loss to the pension scheme as the loan was later repaid in full with interest. HMRC issued Hesco with a 40 per cent charge and ruled that the scheme administrator was separately liable for a 15 per cent charge.

MR Willey had argued HM Revenue & Customs should discharge his liability as claimed he did not know that the unauthorised payment had been made, however the Tribunal found he had failed to “put into place a system to identify the nature of payments before they were made”.

The judgement added Mr Willey should have delivered an event report referring to the unauthorised payment by 31 January 2008, but was not aware of his reporting requirements.

The company paid £40,000 in respect of the scheme sanction charge and the tribunal said it understood that the scheme has also paid the additional £15,000 but may seek re-imbursement from Mr Willey.