Fit and proper persons.

It is a sad fact that scammers and pension liberators target Small Self Administered Schemes (SSAS) with a view to abusing the rules governing these tax favoured funds.
In an effort to prevent this HM Revenue & Customs (HMRC) requires that all parties appointed as the scheme administrator for the purposes of the pension tax legislation, are able to declare themselves as ‘fit and proper persons'.

HMRC can refuse to grant a new scheme registered status if they believe this not to be the case and can withdraw the scheme’s registered status if they have reason to believe that any of the parties making up the scheme administrator do not meet the criteria.

Guidance notes

HMRC has issued guidance notes to assist individuals with regards to who could act as a scheme administrator. The scheme administrator is likely to be a ‘fit and proper person' if they are familiar with, and capable of competently performing, the scheme
administrator’s responsibilities and there is nothing in their past behaviour to suggest that they should not be responsible for the financial management of the pension scheme.

A scheme administrator might be an individual or several individuals acting together (such as the trustees), a corporate body or public sector body. The scheme’s trust deed and rules will usually set out who the scheme administrator is.

With a Dentons’ SSAS, the members (those persons responsible for the day to day running of the SSAS and for all the investment decisions) and Dentons’ Professional Trustee company will together be the scheme administrator.

All members are initially appointed as member trustees by the sponsoring employer, in addition to the Professional Trustee.

Main roles of the Scheme Administrator:

  • registering the pension scheme with HMRC
  • paying certain taxes to HMRC
  • operating tax relief on member contributions under the relief at source system
  • reporting events relating to the scheme and the scheme’s administration to HMRC
  • making formal returns to HMRC
  • providing information to the scheme members, and others, about annual allowances, lifetime allowance usage and other benefits and/or transfers.

There is no test or qualification to pass and whilst not setting out a definition of who or what a ‘fit and proper person' is, HMRC do provide plenty of guidance on factors that would lead them to believe a person or parties are not up to the tasks.

Factors that indicate a person is not 'fit and proper', if they:

  • do not have sufficient working knowledge of pensions and pensions tax legislation to be fully aware and capable of assuming the significant duties and liabilities of the scheme administrator, or does not employ an adviser with this knowledge
  • have previously been involved in pension liberation
  • have previously been the scheme administrator of, or otherwise involved with, a pension scheme which has been de-registered by HMRC
  • have been involved in tax fraud, abuse of tax repayment systems or other fraudulent behaviour including misrepresentation and/or identity theft
  • have a criminal conviction relating to finance, corporate bodies or dishonesty;
  • have been the subject of adverse civil proceedings relating to finance, corporate bodies or dishonesty/misconduct
  • have participated in or been connected with designing and/or marketing tax avoidance schemes
  • employ as an adviser a person who has been involved in pension liberation or tax avoidance
  • have been removed from acting as a trustee of a pension scheme by the Pensions Regulator or a Court, or has otherwise seriously contravened the pensions regulatory system, or the regulatory system of any other professional/governmental regulatory body
  • have been disqualified from acting as a company director or is bankrupt.

It is essential that schemes are administered correctly by, or with the services of, an experienced and professional scheme administrator. 

Further information can be found on the HMRC website or please contact Dentons.