For commercial property, leases and rent reviews should be documented and be kept up to date. Certificates of insurance should also be available. Rent that is received from a connected party, should be evidenced as being on what is known as ‘arm’s length’ terms and this must be evidenced in writing by a professional valuation.
Designated scheme bank account
It is important that there is a designated scheme bank account for the SSAS so that there is no danger of any monies going into the employer company’s own account(s). If this were to happen the money moved could be seen by HMRC as an unauthorised employer payment and a tax charge would be triggered from the date the money entered the employer’s bank account.
Lending
As many SSASs are used to help invest in and grow the company, loan backs are often utilised. The lending rules were tightened considerably in 2006 and for very good reason. They now require each loan that is made to the employer to be secured by a first charge and this must be appropriately documented. There should be a schedule of repayments along with details, and documentation of the security held should be available.
There have been cases where this documentation has been missed or is in fact incorrect and this can again lead to an onerous tax charge.
Taking over
Advisers and SSAS operators that take over a SSAS which has been run without professional help can spot errors and correct them, although in some cases tax charges may have been triggered. HMRC are not ogres and if the errors are relatively small (such as the late filing of the scheme’s annual tax return) and/or have since been corrected, the likelihood of HMRC investigating the scheme further (a process which itself can be time-consuming and expensive) is reduced.
A change of registered administrator, to a firm that is known by HMRC to meet the ‘fit and proper person’ criteria may also give the Revenue some level of comfort that the scheme trustees are ensuring that appropriate guidance is in place and that the scheme is most probably in good administrative shape.
For the SSAS scheme itself, it should always be remembered that the actual SSAS trust remains in place. Appointment of a new or replacement trustee/administrator is not a transfer of the entire scheme, it is simply a change of advisor to the scheme. The ownership of the assets will need to be re-registered to reflect the custodianship of the assets in the new set of trustees. This is where most of the costs with a SSAS takeover are incurred, particularly if a property is involved and solicitors need to be appointed. Another potentially problematic issue is where there is a mortgage outstanding. The lender, in assessing the change in trustee, may potentially look to alter the terms of the mortgage although these of course could just as easily work in the favour
