By Neil Dickey
In order to register a pension scheme, there must be a scheme administrator. To make it harder to set up and run pension liberation schemes, the Finance Act 2014 – which came into force on 1 September 2014 – requires that the scheme administrator must be a ‘fit and proper person’. There is, however, no statutory definition as to what a ‘fit and proper person’ is. HMRC has therefore issued guidance explaining its criteria.
Where HMRC believes that the scheme administrator is not a fit and proper person it can refuse to register a new pension scheme, or even de-register an existing registered pension scheme.
Previously, provided the registration form was completed correctly then it would have been accepted. Now, when registering, the scheme administrator must also declare their fit and proper status. HMRC will normally assume that scheme administrators are fit and proper persons – provided they do not become aware of anything that suggests the contrary.
Factors that HMRC consider would include whether the scheme administrator has:
- sufficient working knowledge of pensions and pensions tax legislation to fulfil their duties, or employs an adviser with this knowledge;
- employed an adviser with any past involvement in pension liberation or tax avoidance schemes, or involvement with a pension scheme which has been de-registered by HMRC;
- been involved in some form of tax fraud or other fraudulent/dishonest behaviour resulting in criminal or civil proceedings;
- been previously disqualified from acting as a company director, or has been declared bankrupt or removed from acting as a trustee of a pension scheme;
- otherwise seriously contravened the regulatory system of any professional/governmental regulatory body.
The new guidance gives HMRC as much flexibility as it needs to stop those involved in pension scheme liberation, but it also gives trustees plenty to think about when appointing a scheme administrator.