Clients are facing delays of up to six months before they can save money into a SSAS due to new checks by HM Revenue & Customs (HMRC).
According to provider Dentons, the delays are deterring some potential clients and interfering with planned investments.
Speaking to New Model Adviser®, Dentons technical sales director Stephen McPhillips said HMRC’s SSAS registration process, which can take between three to six months, has reduced uptake.
Amid concerns scammers were exploiting SSAS, HMRC amended its registration process. It now checks scheme information before registering it, rather than the other way round.
McPhillips said: ‘HMRC’s process for checking and registering a new SSAS needs to be thorough. The change adopted by HMRC from registering a SSAS first and checking the employer later to check first and register later was a mechanism introduced to help avoid SSAS being used as a vehicle by scammers and for purposes inconsistent with HMRC approval.’
Nonetheless, the longer processing time has been an interference in some investors’ savings and investment plans.
‘This change in process has meant we are seeing a three-to-six-month delay in obtaining a pension scheme tax reference number, which can cause difficulties with commercial property purchase, and so on. During that registration period, no contributions or pension transfers can be paid into the SSAS, meaning investments can be delayed.’
McPhilips explained some investors are opening Sipps first and then transferring their investments into a SSAS later on.
‘For some clients a six-month delay could, for example, render a proposed open market property purchase unworkable. We have seen some clients establish new Sipps instead and make the purchase through those, with a view to moving into SSAS at a later date,’ he added.
While it ‘would be nice [for HMRC] to streamline’ its process, McPhillips said, the time period also, understandably, depends on the department’s workload.