And so it starts, the persecution, prosecution and penalties for Small Businesses as the Regulator confirms there has been a considerable increase in the number of compliance notices issue; with some small firms failing to get their affairs in order until they were issued a fixed penalty notice of £400.
When they rolled out the Workplace Pension – Auto Enrolment, it designated anyone with staff members (even just one member of staff) responsible for sorting their pensions. The system itself can appear complicated and is time-consuming, particularly for smaller businesses and those undertaking their own payroll. If you already have an Accounts Department or Accountant, there’s still the additional cost and time commitment to contend with and it’s on an ongoing, never-ending basis.
The Pensions Regulator has been throwing all it can at us to get our attention; with a super-expensive (£8.54 million), rainbow monster brought out in the hope that would do the trick. Getting the message across to smaller employers is all well and good but getting businesses to respond to something many don’t fully understand or agree with, is the challenge.
Meeting that challenge head-on, the Regulator is moving on from the fluffy monster and going for fines, penalties and charges to get the money in. Cases of escalating penalties for employers that failed to implement auto-enrolment before their staging date, are just now coming out.
In one recent case, the Regulator issued a compliance notice requiring the small business to pay both the employer and employee contribution arrears! The business failed to comply and was subsequently issued with a £400 fine. Although in this case the employer eventually appointed an adviser, they had incurred additional fines totalling £10,000 (£2,500 per day for four days).
In total, their failure to comply amounted to unnecessary fines of £25,400: £400 fixed penalty fine, a £10,000 fine and up to £15,000 in employee backdated contributions.
(see: Pensions Regulator Automatic enrolment Compliance and enforcement Quarterly bulletin 1 October – 31 December 2015 5 Lessons learned for employers from our casework )
It could be you, but not in a lottery-winning way…
With up to 500,000 small employers set to reach their staging dates for auto-enrolment pensions this year, please don’t ignore this.
If you don’t have your Staging Date, NOW is the time to find out what and when it is because it could end up costing you dearly. Call your accountant or go online to the Pensions Regulator to find out more. If you still require assistance, please don’t hesitate to get in touch; as a business, we’ve ensured our team are fully up-to-date with all the new rules and potential pitfalls and have worked to establish the most cost-effective, employer-friendly solution. Get in touch and we’ll talk you through what needs to happen and we won’t charge you for the visit – you’ve got enough on your plate as it is. ilyas@taxexpert.co.uk