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First-tier Tribunal (General Regulatory Chamber)
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Kellys Retail Ltd v Pensions Regulator [2025] UKFTT 677 (GRC) (12 June 2025)
URL: http://www.bailii.org/uk/cases/UKFTT/GRC/2025/677.html
Cite as:
[2025] UKFTT 677 (GRC)
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Neutral Citation Number: [2025] UKFTT 677 (GRC) |
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Case Reference: FT/PEN/2024/0057 |
First-tier Tribunal
(General Regulatory Chamber)
Pensions
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Decided without a hearing Heard on: 30 May 2025
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Decision Given On: 12 June 2025 |
B e f o r e :
JUDGE A. MARKS CBE
JUDGE SAWARD
____________________
Between:
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KELLYS RETAIL LIMITED |
Appellant |
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and |
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THE PENSIONS REGULATOR |
Respondent |
____________________
____________________
HTML VERSION OF DECISION
____________________
Crown Copyright ©
Decision: The reference is dismissed, and the matter remitted to the Respondent. The Fixed Penalty Notice is confirmed.
REASONS
Background
- Kellys Retail Limited ('the Employer') challenges a Fixed Penalty Notice (FPN) issued by the Respondent ('the Regulator') on 16 January 2024 under Notice number: 145698460386.
- The FPN was issued under section 40 of the Pensions Act 2008 ('the 2008 Act'). It required the Employer to pay a penalty of £400 for failure to comply by 13 February 2024 with a Compliance Notice ('CN') dated 17 November 2023. In addition, the FPN required the Employer to comply with the CN.
- Upon the request of the Employer's accountants on 29 January 2024, the Regulator reviewed its decision to issue the FPN. The Regulator confirmed the FPN in its review decision of 3 February 2024.
- Through its accountants, the Employer completed a declaration of compliance on 29 January 2024 before referring the decision to issue the FPN to the Tribunal on 20 February 2024.
- The parties and the Tribunal agree that this matter is suitable for determination on the papers in accordance with Rule 32 of The Tribunal Procedure (First-tier Tribunal) (General Regulatory Chamber) Rules 2009, as amended. The Tribunal has been provided with a bundle of documents consisting of some 100 pages. The Tribunal has considered all the evidence and submissions made by both parties.
The law
- The Regulator was established by section 1 of the Pensions Act 2004 ("the 2004 Act"). Its objectives within section 5 of that Act include maximising compliance with the Employers' Duties under Chapter 1 of Part of the 2008 Act, along with the safeguards in sections 50 and 54 of the 2008 Act.
- The 2008 Act imposes a legal obligation on employers in relation to the automatic enrolment of certain "jobholders" into occupational or workplace personal pension schemes and to maintain their membership of a qualifying pensions scheme. The Regulator has statutory responsibility for securing compliance with these obligations and may exercise enforcement powers provided by the 2008 Act.
- Each employer is assigned a date (the "duties start date") from which the timetable for performance of their obligations is set. From that date an employer has a duty to pay contributions to a qualifying pension scheme under section 3 (automatic enrolment of eligible staff into a pension scheme). The employer must regularly and periodically pay its own and its employees' contributions to the managers or trustees of the pension scheme.
- An employer must provide certain specified information to the Regulator about its compliance with these duties in a "declaration of compliance" within five months of its duties start date.
- The Regulator may issue a CN to a person if the Regulator is of the opinion that the person has contravened one or more of the employer duty provisions (section 35(1) of the 2008 Act). A CN directs the person to whom it is issued to take, or refrain from taking, the steps specified in the notice in order to remedy the contravention.
- If the Regulator is of the opinion that a person has failed to comply with a CN, then it may issue a FPN under section 40(1) of the 2008 Act. A FPN is a notice requiring the person to whom it is issued to pay a penalty within the period specified in the notice. The penalty is determined in accordance with regulations. The current prescribed fixed penalty is £400.
- The employer may ask for a review of the FPN under section 43 of the 2008 Act within 28 days of the notice. The effect of the FPN is suspended whilst a review is taking place. The Regulator may confirm, vary or replace the notice after the review.
- Under section 44 of the 2008 Act, an employer who has been issued with a FPN may make a reference to the Tribunal provided an application for review has first been made to the Regulator. The FPN is suspended once the Tribunal receives the notice of reference. The suspension ends when the reference has been determined, the Tribunal has remitted the matter to the Regulator and any directions of the Tribunal for giving effect to its determination have been complied with.
- The role of the Tribunal is to make its own decision on the appropriate action for the Regulator to take, having regard to the evidence before it. The burden of proof lies with the person making the reference, being the Employer in this case. The standard of proof is the balance of probabilities.
- The Tribunal may confirm, vary or revoke a penalty. When it reaches a decision, the Tribunal must remit the matter to the Regulator with such directions (if any) required to give effect to its decision.
The facts
- The Employer is a private limited company registered at Companies House, Belfast. It was incorporated on 16 March 2023. The Employer is the employer for the purposes of the 'Employer Duties' under the 2008 Act.
- The Employer's duties start date was 10 June 2023. From this date compliance with the timetable for performance of the Employer's obligations was set. The Regulator sent the Employer a 'welcome pack' dated July 2023 which set out the various duties on the Appellant along with a checklist to assist the Appellant in meeting the deadlines.
- The declaration deadline for submitting the declaration of compliance was 5 months later on 9 November 2023. When the CN was issued on 17 November 2023, it extended the deadline for compliance until 28 December 2023.
- The Regulator issued a FPN on 16 January 2024 imposing a fixed penalty of £400.
- The Employer made a review request in respect of the FPN on 29 January 2024. The review response of 3 February 2024 confirmed and upheld the FN.
- The Employer complied with the CN by filing a declaration of compliance on 29 January 2024.
Submissions
- The grounds of appeal are as follows:
(a) The Employer is a newly established business;
(b) The shop purchased by the Employer was previously called 'Fairgreen Stores'. It is believed they did not receive previous post due to confusion on the name;
(c) The Employer's accountants enrolled the Employer in a pension scheme the same day that they received the FPN from the Employer;
(d) The penalty fee should be reduced or set aside as the Employer was enrolled as soon as the accountants received notification that this was required.
- In its response dated 18 March 2024, the Regulator opposed the Employer's reference of this matter to the Tribunal for the following reasons:
The decision to issue an FPN was fair, reasonable, and proportionate, as:
(a) The notices were correctly served on the Employer;
(b) The Employer failed to take timely steps to make the declaration of compliance;
(c) This declaration is not a mere administrative detail. It is a vital source of information and a central part of the Regulators' compliance and enforcement approach;
(d) The Regulator made it clear that action will be taken against employers who fail to provide a declaration in its published Compliance and Enforcement policy and in correspondence sent to the Employer;
(e) The legislation allows employers a generous period of 5 months in which to make a declaration of compliance. Further time was provided for compliance in the CN which extended the deadline to 28 December 2023. More than sufficient time was allowed.
Consideration and decision
- Taking account of all the evidence provided, the Tribunal concludes that the Employer has given no reasonable excuse for failure to comply with its duties.
- The grounds of appeal suggest that there were issues with post sent to the shop going astray. It is not explained how any confusion over the previous shop name is relevant. The Employer has a completely different name from the previous shop owner, and not does not explicitly say that it has experienced problems with its post. Notably, the Employer does not deny receiving the correspondence or notices from the Regulator.
- In any event, both the CN and FPN were addressed to the company's registered office address. This was the proper address for service under section 303(6)(a) of the 2004 Act and section 7 of the Interpretation Act 1978. Furthermore, Regulation 15(4) of the Employers' Duties (Registration and Compliance) Regulations 2010 (SI 2010/5) presumes that (a) where a notice is dated by the Regulator, it was posted or otherwise sent on that day; (b) it was issued on the day it was sent or otherwise posted; and (c) it was received by the person to whom it was addressed.
- Companies House records supplied show that the company name and address have not changed since the date of incorporation, and so the correct address was used.
- Even though this was a new company, it is still for the Employer as a responsible employer to be aware of its legal duties and to ensure full and on-time compliance with them. Whilst the Employer's representative may have enrolled the company in a pension scheme immediately upon receipt of the FPN from the Employer, this was much later than required. Not only did the Employer have 5 months to complete its declaration of compliance, but the CN extended the compliance deadline by more than a further 6 weeks. Compliance was not achieved until 29 January 2024 despite reminders from the Regulator who was not obliged to issue reminders at all but was entitled in all the circumstances to issue the FPN and did so, more than two weeks after the extended deadline for compliance had expired.
- There is an important public interest in consistently enforcing compliance with employers' duties under the 2008 Act via penalty notices to deter breaches and promote compliance. Even if third party professionals are engaged to assist an Employer with its auto-enrolment duties, it remains the Employer's obligation to comply (on time and in full). In The Pensions Regulator v Strathmore Medical Practice [2018] UKUT 104 (AAC), the Upper Tribunal agreed (at paragraph 17) that the Regulator was entitled to take the approach that the deterrent effect would be greatly diminished if the practice were to revoke penalty notices in all cases provided compliance is achieved at some point. Of course, each individual case must still be considered on its own merits.
- In this case, the Tribunal has some sympathy for the Employer in that it had zero workers wanting a pension in place for automatic enrolment. Nevertheless, this does not alter the fact that there is a duty upon all employers with workers to complete a declaration of compliance. This is an important regulatory tool for the Regulator to know if a new business has complied or not with the statutory requirements.
- The Regulator produces a Decision Notice (Appeal No. PEN/2016/0011) between Rossendale Sports Club and the Regulator dated 23 March 2016 involving the imposition of a FPN of £400. Another First-tier Tribunal decision is not binding, but we concur with the approach. The then Chamber President explained that the plain fact of the matter was that the appellant failed to comply with the law. Whilst the reason for the failure had been explained, it cannot rationally lead to the penalty being waived. Further, the legislation gives the Tribunal no ability in these circumstances to reduce the amount of the penalty.
- The amount of the penalty is fixed by law under Regulation 12 of the Employers' Duties (Registration and Compliance) Regulations 2010 (SI 2010/5). Neither the Regulator nor the Tribunal has discretion to reduce the penalty below £400. If the penalty will cause hardship to the Employer, it remains open to the Employer to approach the Regulator, as invited, to see whether payment terms can be agreed.
- The FPN is confirmed, and the Tribunal remits the matter back to the Regulator. No directions are necessary.
Signed: Judge Saward
Date: 10 June 2025