The Government has issued draft regulations to address concerns about scam risks for members of small self-administered schemes (SSAS).
The plans include the introduction of a red flag where a transfer is proposed but does not demonstrate an employment link with the receiving SSAS scheme.
The red flag will give scheme providers the ability to refuse the transfer. Providers will be able to make the transfer if there are satisfied, “on the balance of probabilities” of the legitimacy of the SSAS scheme.
In its announcement of the plans, the Government said that a lack of employment link is a strong indicator that a receiving SSAS may be operating outside of its legitimate purpose.
Small Self Administered Schemes are particularly used by smaller businesses, often by professional practices such as dentists, GPs and other professionals. Some use the scheme to buy their own premises as part of the SSAS.
Caitlin Southall, director of SSAS transformation and proposition at WBR Group, said the attention from the Government on SSAS transfers was promising and shows a ‘positive step towards better regulation’ and the removal of ‘lingering bad actors’ in the SSAS arena.
However, she said the details need more work before being enacted if they are not to cause issues for legitimate transfers.
She said: “The lack of an employment link is a great reason to “red flag” a transfer except where the SSAS members are directors and therefore don’t draw PAYE, this is likely to be a significant number of SSASs.
“There are a number of alternatives to check a member’s employment link with a company to determine a strong case based on a balance of probabilities. It’s important to balance the need to be diligent against fraud with not unnecessarily delaying legitimate transfers.”