British
and Irish Legal Information Institute
Freely Available British and Irish Public Legal Information
[
Home]
[
Databases]
[
World Law]
[
Multidatabase Search]
[
Help]
[
Feedback]
First-tier Tribunal (General Regulatory Chamber)
You are here:
BAILII >>
Databases >>
First-tier Tribunal (General Regulatory Chamber) >>
RZ Enterprise Ltd v Pensions Regulator [2025] UKFTT 549 (GRC) (20 May 2025)
URL: http://www.bailii.org/uk/cases/UKFTT/GRC/2025/549.html
Cite as:
[2025] UKFTT 549 (GRC)
[
New search]
[
Printable PDF version]
[
Help]
|
|
Neutral Citation Number: [2025] UKFTT 549 (GRC) |
|
|
Case Reference: FP/PEN/2024/0274 |
First-tier Tribunal
(General Regulatory Chamber)
Pensions
|
|
Heard by Cloud Video Platform Heard on: 3 February 2025
|
|
|
Decision Given On: 20 May 2025 |
B e f o r e :
JUDGE WATTON
____________________
Between:
|
RZ ENTERPRISE LIMITED
|
Appellant
|
|
- and -
|
|
|
THE PENSIONS REGULATOR
|
Respondent
|
____________________
Representation:
For the Appellant: Mr Rizwan Shabir (director)
For the Respondent: Ms Winstanley (in-house lawyer)
____________________
HTML VERSION OF DECISION
____________________
Crown Copyright ©
Decision: The appeal is dismissed, and the matter is remitted to the Regulator without directions. The penalty notice is confirmed.
REASONS
- This is a reference to the Tribunal by the Appellant in respect of a £400 Fixed Penalty Notice ("FPN") 179806016228, issued by the Respondent on 26 June 2024.
- The hearing was held by CVP. The Appellant had to join by telephone owing to technical difficulties but was able to hear and be heard by both the Tribunal and Ms Winstanley. The Tribunal considered the bundle prepared by the Respondent and the submissions made by both parties.
Factual background
- On 23 September 2017 the Appellant made a declaration of compliance to the Respondent, giving it a range of specified information about the business, its employees and its pension scheme. The Appellant was required to re-declare its compliance by 2 April 2024 under the relevant statutory framework. It is common ground that it failed to do so. On 1 May 2024 the Respondent issued the Appellant with a Compliance Notice ("CN"). The CN set out that the Appellant had to complete its re-declaration of compliance by 11 June 2024.
- It is not disputed that the Appellant did not comply. On 26 June 2024 the Respondent issued the Appellant with the FPN of £400, due to be paid by 24 July 2024.
- On 8 July 2024 the Appellant filed a request for a review, on the basis that there had been no email communication from the Respondent, payroll had been outsourced to accountants and the Appellant was unaware of the requirement for the declaration. The review also set out that the company was in financial difficulties.
- The Respondent replied to the review the same day, upholding the FPN. This reference was filed on 9 July 2024, in time. A re-declaration was made on 21 July 2024.
Legal framework
Duties of the employer
- The Pensions Act 2008 ("the 2008 Act") requires employers to enrol "job holders" in occupational or workplace pension schemes.
- Employers have additional duties under the 2008 Act. Under section 11, an employer subject to automatic enrolment duties must give prescribed information to the Regulator.
- This information is set out in Regulation 3 of the Employers' Duties (Registration and Compliance) Regulations 2010 ("the 2010 Regulations") and includes the employer's details, information about its workers and information about the occupational or personal pension scheme it uses for automatic enrolment purposes.
- The declaration of compliance must be provided within five months of the staging date or duty start date (Regulation 3(1)). The employer must file a re-declaration of compliance within five months after the third anniversary of the staging date. The employer then must file further re-declarations within five months after the third anniversary of the previous automatic re-enrolment date (Regulation 4(1)).
Powers of the Regulator
- The Pensions Regulator must ensure employers' compliance with the 2008 Act, so the legislation gives it specified powers to do so, including:
a. Section 35: the Regulator may issue a compliance notice if an employer has contravened one or more of the employer duties. A compliance note requires an employer to take action, usually by a specified date.
b. Section 40: the Regulator may issue a fixed penalty notice for failure to comply with various provisions of the 2008 Act, including sections 35 and 37. This requires the employer to pay a penalty within a specified period. The penalty is £400 and is set by the 2010 Regulations.
Presumption of service
- Section 303(6)(a) of the Pensions Act 2004 ("the 2004 Act") and regulation 15(4) of the 2010 Regulations create a presumption that notices are received by the employer when addressed to them and sent to their registered office or principal office address.
The role of the Tribunal
- Section 44 of the 2008 Act allows a person to make a reference to the Tribunal in respect of the issue of a penalty notice or the amount of the penalty payable under the notice. Section 103(3) of the 2004 Act allows the Tribunal to consider any relevant evidence, even where it was not available to the Regulator. Section 103(4) provides that on a reference the Tribunal must determine what (if any) is the appropriate action for the Regulator to take. The role of the Tribunal is to make its own decision on the appropriate action to take, having regard to all the circumstances before it.
- Section 43 of the 2008 Act provides such a reference is only permitted where the Regulator has reviewed the notice or if an application for a review has been made and the Regulator has determined not to carry out a review.
The parties' submissions
The Appellant
- In its appeal form the Appellant cited six reasons why the appeal should succeed:
a. Poor communication/lack of communication from the Respondent as the Respondent did not send emails in respect of the latest CN and FPN.
b. No warning about the outstanding re-declarations from 2021 and 2024, meaning the Appellant was unaware of its duties. A fine was not mentioned.
c. A third party had been contracted to handle automatic enrolment, and the issue has since been rectified.
d. Corrective action was taken promptly.
e. The Appellant has a history of compliance with regulatory requirements.
f. The penalty could have a significant impact on the business.
- In his oral evidence and submissions to the Tribunal Mr Shabir explained that the business is in some financial difficulties which make it difficult to pay the fine. He also said that he has never had a long-term employee other than he and his wife, who are directors. He was not clear whether he and his wife were also employees.
- Mr Shabir was also candid that he had previously outsourced this compliance to an accountant who failed to do what he had asked. He understood it remained the Appellant's responsibility but would therefore like the fine waived on this occasion.
The Respondent
- Ms Winstanley maintained that the appeal should be dismissed. She addressed each of the grounds of appeal, as follows:
a. The statutory presumption of service applies and has not been displaced, the Respondent is not required to communicate by email. The address used to send notices was used on the appeal form. It is the correct registered address.
b. The Appellant had been informed of its duties on many occasions, including in the welcome pack sent to it in June 2015 and three reminder letters sent between July 2023 to April 2024.
c. The duty to comply falls on the Appellant, it cannot subcontract out of its statutory duty.
d. The legislative duties are ongoing and unaffected by previous compliance.
e. The penalty is supposed to be punitive and have a deterrent effect. If payment would cause hardship the Respondent may be able to agree a payment plan.
- In response to Mr Shabir's point about number of employees, Ms Winstanley said that the Regulator's systems showed that there were four employees and in any event the Appellant still needed to report.
Findings
Was the Compliance Notice correctly served on the Appellant?
- I am satisfied on the balance of probabilities that the Appellant received the CN. Mr Shabir did not deny receipt; he explained that the business is simply mostly paperless and the post is not checked frequently. The address used was not disputed either, it is the registered office address for the business on Companies House and was at all material times.
- The Respondent is not required to correspond by email, section 303(2) of the 2004 Act specifically says post is an acceptable method of service.
Does the Appellant have a reasonable excuse for failing to comply with the compliance notice?
- The Appellant was sent letters dated July 2023, January 2024 and 15 April 2024 which set out the requirements to re-declare compliance. No action was taken in relation to any of them. They were all sent to the registered business address.
- Moreover, the CN describes what needs to be done ("You must tell us how you have met your employer duties by completing your re-declaration of compliance."). The CN also sets out the consequences for not doing it ("If you don't complete your re-declaration of compliance by 11 June 2024, we may issue you with a £400 penalty."). It is not a reasonable excuse to say that there were not enough warnings. Even without the additional letters, the CN is a warning.
- As accepted by Mr Shabir, the duty to comply is on the Appellant, not its accountants. The correspondence was sent to the registered office address and not to the accountant. As Ms Winstanley submitted, Mr Shabir is free to pursue a complaint or other action against his accountant, but that is not a matter for this Tribunal. Instructing a third party to assist with these duties alone is not a reasonable excuse.
- The Tribunal was not taken to any legislative provision that demonstrates that the Appellant would not need to comply if it did not have any employees at the time of re-declaration. In any event, Mr Shabir explained that he had short-term employees at various times. He was also not certain whether he and his wife were employees as well as directors. This is therefore not a reasonable excuse for non-compliance.
- Mr Shabir also convincingly set out the improvements he has made to the business to ensure this does not happen again. If that is the case, the Appellant is unlikely to incur further penalty notices. It does not provide a reasonable excuse for failing to comply with the CN in this case.
- I am sympathetic to Mr Shabir's concerns about the effect of a fine on a small business in financial difficulties but the level of the FPN is set out in the 2010 Regulations and approved by Parliament. The fine's purpose is both to be punitive and provide a deterrent against non-compliance. As Ms Winstanley points out, the Regulator does have payment options for businesses in hardship.
- I am satisfied that there was no reasonable excuse for failing to comply with the actions set out in the compliance notice.
Conclusion
- The reference is dismissed. I remit the matter to the Regulator without directions and confirm the Penalty Notice.
Signed Judge Watton
Date: 18 May 2025