Scheme Sanction Charge: Scheme Administrator Loses Challenge To HMRC

In Willey v HMRC a scheme administrator made an unsuccessful challenge against a scheme sanction charge relating to an unauthorised employer payment. It is a reminder of the importance of having systems in place to monitor payments made from a scheme – particularly where the scheme administrator does not have a hands on role.

Mr W was the scheme administrator for Finance Act 2004 purposes but not a trustee (this is fairly unusual as standard practice is for the trustee to also be the "administrator" for legislative purposes). The trustees made a loan to one of the employers without Mr W's knowledge. There was no dispute that this was an unauthorised payment. The employer paid the 40 per cent unauthorised payment tax charge, leaving a 15 per cent scheme sanction charge to be paid by the scheme administrator (as provided for in the Finance Act 2004).