Submitted by Sestini & Co
| on Fri, 07/06/2018 - 6:12 | In HMRC
Most of us who have SSAS schemes are aware that the scheme is registered with HMRC, and that annual returns are made, but what does that mean in practice, and why do new schemes take so long to register? Our blog looks to explore the relationship between Small Self-Administered Schemes (SSAS) and HMRC…
Working as a Professional Trustee, I’ve forever been using the line ‘we act as a firewall between the Trustees and the Revenue’ – to me, that means a Professional Trustee translates what the members of a scheme want to do, into what they can do, it’s about interpreting rules and the Pension Tax Manual to ensure scheme activity doesn’t fall foul of these rules, but the fund still thrives.
The annual return
As well as the Professional Trustee helping ensure the scheme runs as it should, HMRC ask for a ‘return’ to be made each year, in the return, the Trustees (usually via the Professional Trustee) declare things like:
- Scheme net worth
- Value of connected party transactions
- New loans
- New purchases
The returns are required so that any ‘reg flags’ can be investigated – for example, are loans being repaid, is rent being collected, are contributions being treated correctly.
As well as this annual admin, there’s an established process when registering a scheme. Before the ‘Pension Freedoms’ of 2015, and in response to a dramatic increase in pension scams, HMRC used to allow a SSAS to be registered via its online portal, with approval being given instantly. You could set up a scheme, open a bank account and contribute the next day.
Nowadays, the online form is completed with enhanced information around the sponsoring employer, and who the Trustees are, and instead of approval, HMRC issue an APSS530, where the Trustees are asked to give the answers to around 14 questions. Whilst the nature of these questions is subject to slight change, the aim is for HMRC to take the opportunity to fully review a proposed scheme before it’s approved. The prudent view being that preventative action could save individuals thousands of pounds if falling prey to scams, incurring tax charges, and requiring arduous reviews once the scheme is established.
The specialist team at HMRC who undertake the pre-approval checks can’t do so instantly, when pension scheme rules can run into some 70 pages, and employer information is being checked and cross referenced, there will inevitably be a delay. At the time of writing, the approval waiting time was around 12 weeks from HMRC receiving all information requested in the APSS530.
Understanding the complexities of the process
Our pension scheme application process takes into consideration HMRC’s requirements, and our application forms are composed so that Trustees don’t need to attend repetitive meetings and provide follow up information – the going to and fro is our job!
Sestini & Co Pension Trustees Limited are happy to support HMRC with the checks and their approval process – because a SSAS is a bespoke pension, tailored to the needs of its Members, we take the view that these pensions are more akin to buying a house than opening a bank account – yes, it will take longer than an off-the-shelf pension, and while we’re biased, we certainly believe a SSAS to be worthwhile.
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