SSAS scheme registration timescales

HM Revenue & Customs (HMRC) stance not to register schemes with dormant employers has been topical of late but in fact, HMRC have always had the power to request information and documents to enable them to consider fully new scheme registrations under powers contained in Section 153A of the Finance Act 2004.

In our experience, this power was rarely if ever used in the early years following scheme simplification and it was not uncommon for a scheme administrator to make an application for registration using the HMRC’s Pension Schemes Online portal and for the scheme to receive registration within a matter of 3 -10 working days.

This process began to change when HMRC first introduced its “check and register regime” in 2014. Scheme administrators would receive an acknowledgement of the registration request and accompanying form APSS530. 

The form APSS530 asks for subsequent submission of the signed scheme establishing deed and rules, as well as a raft of information covering details of the scheme’s founder employer, membership, trustees, proposed investments and any party involved in giving advice with regard to the establishment of the scheme. 

The information requested must be provided within a relatively short timescale of around 6 weeks and failure to meet the deadline can result in HMRC deciding to cancel the registration request. Providing inaccurate information can result in penalties of up to £3,000 so the submission needs to be full, correct and timely. 

Fortunately, most recognised practitioners requesting scheme registrations are well versed in this process and collect all the necessary data at the point of creating the scheme. Frustratingly, there is no facility to submit this data at the same point as the original registration request meaning a delay between original registration request and subsequent data submission, which with our own experience can be several weeks. 

HMRC will then review all the submitted material and decide if the scheme can receive their official registration. A scheme cannot of course receive a transfer from another registered pension scheme until it is itself registered, nor can contributions be paid. In fact, it is nearly impossible to establish a scheme bank account as the bank compliance will as a matter of course now also request sight of HMRC’s notice of registration before an account can become operable. 

All of which can lead to problems if the founder employer is fast approaching its year end and is looking to reduce profits and subsequently its tax liability by payment of contributions in their current financial year. 

We have experienced several narrow escapes and particularly at this time of year as many employers’ year-ends are fixed at 31st March or 5th April. Realistically at time of publication, it may well be too late to start the registration process now to accommodate employers in this situation. 

Alternative strategies might need to be considered. One option is to consider the extension of the company’s year-end, which can be for a period of up to 18 months but this process can only be done once in every five years. As this process also alters the company’s reporting dates, it might be considered administratively inconvenient. 

Fortunately alternative options exist around the use of other pension vehicles as a bridge to allow the contributions to be made within the required company year end and held until the SSAS actually receives its registered status. Scheme members may have current personal or executive pensions from the same employment or indeed from previous employments,  although the terms of these policies would need to be scrutinised to determine if loses might be incurred  between contribution and receipt in the event of, for example, a less than 100% allocation rate. 

If no current schemes are available, it might be possible to create a new low cost platform or life office personal pensions or self invested personal pensions (SIPPs) to hold the contributions until they can be transferred on. However there are likely to be both compliance and administration costs if either of these routes are followed though.

An adviser will also need to bear in mind the period before registration when considering time sensitive investments. Proposed property purchases or bonds where investments are permitted, for example, only within specified periods, may be missed and it would be wise to manage client expectations.

A final option might be the conversion of an existing Executive Pension Scheme to a Small Self-Administered Scheme. It is often possible to utilise an existing registered scheme and amend by deed, the scheme’s rules so as to adopt those of a fully self-administered arrangement. A scheme bank account can then be established in often a much shorter timescale than the creation of a new scheme from scratch.