Crownsway Off Licence Ltd v The Pensions Regulator

Neutral citation number: [2025] UKFTT 00668 (GRC) First-tier Tribunal (General Regulatory Chamber Pensions Regulation Appeal Reference: PEN/2024/0233 Decided without a hearing on 20 May 2025 Decision given on 11 June 2025 Before JUDGE ANTHONY SNELSON Between CROWNSWAY OFF LICENCE LTD and THE PENSIONS REGULATOR DECISION Appellant Respondent The decision of the Tribunal is that the appeal is allowed and the Fixed Penalty Notice under challenge is quashed. REASONS The Appellant runs a small business in Newquay, Cornwall. By this appeal 1. (strictly, reference), it challenges a Fixed Penalty Notice (‘FPN’) issued on 27 March 2024 by The Pensions Regulator (‘TPR’), requiring it to pay a penalty of £400 for failing to comply with an Unpaid Contribution Notice (‘UCN’) issued on 29 January 2024 by the deadline of 11 March 2024. The matter came before me for determination on the papers, both parties 2. having stated that they were content for no hearing to be held. I was satisfied that it was just and in keeping with the overriding objective to adopt that procedure. The statutory framework 3. The Pensions Act 2008 (‘the Act’) imposes a number of requirements on employers in relation to the automatic enrolment (‘AE’) of certain ‘job holders’ in occupational or workplace personal pension schemes. These include duties to pay relevant contributions to occupational and personal pension schemes. TPR has statutory responsibility for securing compliance with AE requirements. If it is of the opinion that any relevant contributions have not been paid, it may issue an Unpaid Contributions Notice (‘UCN’) pursuant to section 37 of the Act1, requiring the employer to pay the contributions and provide evidence that it is done so. By s40 of the Act, TPR may issue a FPN in the sum of £4002 to a person if it 4. is of the opinion that he or she has failed to comply with (among other things) a UCN. In the event of any further breach TPR may issue an Escalating Penalty Notice (‘EPN’) under s41 of the Act, imposing heavier financial sanctions. 5. TPR may review a FPN or EPN on the application of the person affected (s43(1)(a)). The effect is to suspend the relevant Notice pending the outcome of the review (s43(4)). The possible outcomes are confirmation, variation and revocation of the Notice; in the event of revocation, TPR may substitute a different Notice (s 43(6)). 6. By s44 of the Act, provision is made for references to the First-tier Tribunal (‘FTT’) or (in circumstances which do not apply here) Upper Tribunal (‘UT’) in (so far as material) the following terms: 1 Hereafter, section numbers will be given as, say, s1, s35 etc. 2 The figure is prescribed by the Employers’ Duties (Registration and Compliance) Regulations 2010, reg 12. A person to whom a notice is issued under section 40 or 41 may, if (1) one of the conditions in subsection (2) is satisfied, make a reference to the Pensions Regulator Tribunal3 in respect of— (a) … the issue of the notice; (2) (a) (b) The conditions are— that the Regulator has completed a review of the notice under section 43; that the person to whom the notice was issued has made an application for the review of the notice under section 43(1)(a) and the Regulator has determined not to carry out such a review. (3) On a reference to the Tribunal in respect of a notice, the effect of the notice is suspended for the period beginning when the Tribunal receives notice of the reference and ending— (a) (b) when the reference is withdrawn or completed, or if the reference is made out of time, on the Tribunal determining not to allow the reference to proceed. (4) (a) (b) (c) For the purposes of subsection (3), a reference is completed 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. In dealing with a reference the powers of the FTT are very wide. The 7. Pensions Act 2004, s103 includes: (3) On a reference, the tribunal concerned must determine what (if any) is the appropriate action for the Regulator to take in relation to the matter referred to it. In In the matter of the Bonas Group Pension Scheme [2011] UKUT B 33 (TCC) Warren J, sitting in the UT, held that there was nothing in s103 or elsewhere to constrain the tribunal’s approach to a reference. Its function is not that of an appellate court considering an appeal.4 It must simply make its own decision on the evidence before it (which may differ from that before the Regulator). The key facts 8. The material facts are not in dispute. Besides those given in para 1 above, they can be summarised shortly as follows (I borrow from TPR’s ‘Response’ document). 3 Now the First-tier Tribunal 4 Although the terminology of ‘appeal’, ‘appellant’ etc is used 8.1 The Appellant is an ‘employer’ for the purposes of the ‘employer duties’ specified under the Act. 8.2 On 29 January 2024 TPR issued a UCN requiring the Appellants to: (a) calculate the relevant unpaid contributions; (b) contact the pension scheme provider and pay the contributions; and (c) provide evidence of having done so to TPR. The document specified a deadline of 11 March 2024 and warned that a failure to comply by that date could lead to the issue of a FPN. In the absence of any evidence of compliance with the UCN by the due date, TPR issued the FPN (already mentioned) on 27 March 2024, specifying a compliance date of 24 April 2024. 8.3 8.4 On 26 April 2024 TPR issued an EPN to the Appellant but, on 29 May 2024, that notice was revoked. 8.5 On 7 May 2024 the Appellant contacted TPR by telephone to state that it was having difficulties and requesting further time for compliance. This communication (made well after the compliance dates specified in the UCN and FPN) was the first to make TPR aware of the difficulties. 8.6 On 23 May 2024 the Appellant applied for reviews of the FPN and EPN, attaching in support evidence of payment of outstanding contributions in respect of two individuals (the only individuals relevant for these purposes), Resham Singh and Zoe Singh. The former was a director of the Appellant; the latter was not. 8.7 On 29 May 2024 TPR conducted reviews of the decisions to issue the FPN and EPN. The EPN was revoked but the FPN was affirmed. The appeal The notice of appeal is dated 12 June 2024. It is fairly summarised in TPR’s 9. response to the appeal as raising three points. First, the breach arose from the difficulty of the Appellant’s agent in accessing its account with the pension provider. Second, the breach was accidental. Third, the Appellant, a small company would be severely and disproportionately affected if the FPN was upheld. Discussion and conclusions I start by reminding myself of the terms of the applicable legislation 10. (summarised above) and in particular (a) the salutary purposes which the AE regime is designed to achieve, including ensuring that qualifying workers have the chance through occupational pensions to enjoy dignity and comfort in retirement; (b) the need for the mandatory requirements of the scheme to be backed up by an effective and robust enforcement mechanism; and (c) the need for other employers to understand that those requirements will be enforced. In my view, the correct approach is to look to the Appellant to show a good reason why TPR should not have followed its usual practice of meeting a breach of a UCN with a FPN. 11. I should say at once that this is not a case of an employer simply overlooking or disregarding its AE obligations. I accept that the Appellant found itself in a difficulty as a consequence of the death of its payroll agent and the fact that the agent appointed in his or her stead did not have access to the relevant pension provider account. I further accept that these circumstances resulted in the new agent being without the information needed to process contributions payments in the usual way. 12. Although I start (as did TPR) from the position that the Appellant is entitled to sympathy, that by itself does not warrant upholding the appeal. Having considered everything before me, however, I have reached the conclusion that that is the proper and just outcome here. It is true that TPR made it clear all along that the Appellant must satisfy the requirements of the UCN in full by 11 March 2024 and a failure to do so would expose it to the risk of a financial penalty. There was no ambiguity about the messaging. It is also true that the Appellant (and its agent) had means of communicating with TPR and could have sought to raise with TPR the problem of access to the pension provider account before the expiry of the deadline of 11 March 2024. And had the Appellant (or its agent) taken that step, TPR might have extended time for compliance with the UCN (although TPR nowhere says that that indulgence would necessarily have followed). I do not consider that these or any other points made on behalf of TPR should be seen as determinative. I have several reasons. 13. In the first place, I think it important to guard against holding employers to an unreasonably high standard of problem-solving skill. Certainly in the case of a small and unsophisticated business running on tight margins with very limited skills and resources at its disposal, there would be a real risk of injustice in doing so. 14. Second, the difficulty faced by the Appellant was real and acute. It is not questioned by TPR. Nor is it suggested that it could readily have been overcome. Nor is it said that it was in any sense the fault of the Appellant or any agent of the Appellant. 15. Third, the point that it was open to the Appellant (or its agent) to contact TPR to seek its assistance (and perhaps an extension of time) carries, I think, limited weight. Scrutiny of TPR’s standard documentation does not suggest a general ‘open door’ approach to enquiries. In the cases of review applications employers are invited to use an online address or telephone a particular number. But there is nothing to suggest the availability of a general enquiries service. TPR’s argument would have carried much more weight if it could have pointed to an open invitation to any employer struggling to comply with any AE obligation to dial a specified number or email a specified address with the promise of a prompt reply. Outcome 16. I find very little merit in the second and third grounds but, for the reasons stated above, I am clear that, under ground one, the Appellant has demonstrated a good excuse for its failure to meet the requirements of the UCN. Accordingly, I allow the appeal and quash the FPN. (Signed) Anthony Snelson Judge of the First-tier Tribunal Date: 5 June 2025 6