The provider, which is the country’s largest independent provider of small self-administered schemes, says advisers should remember that the concept of unauthorised payments was introduced by HMRC at A-day and more recently it announced that they will incur tax penalties.
The non-payment of rent where the property is let to the principal or associated employer could be treated as an unauthorised payment.
Ian Hammond, managing director of Rowanmoor Pensions, warns that if the rent is not paid when due, the scheme becomes a creditor of the employer.
Should other creditors be given preferential treatment at the expense of the pension scheme, then the amount outstanding will be treated as an undocumented loan, which in turn would be treated as an unauthorised payment, with tax charges of up to 70 per cent.
Hammond says: “The key is to pay all rentals on time and in accordance with the terms of the lease.”