First-tier Tribunal (General Regulatory Chamber)

NCN: [2025] UKFTT 254 (GRC)

Appeal Reference: PEN/2024/0269

First-tier Tribunal

(General Regulatory Chamber

Pensions Regulation

 

Decided without a hearing on 22 January 2025

 

Before

 

Judge anthony snelson

 

 

Between

 

Black Mocha Ltd

Appellant

and

 

the pensions regulator

Respondent

 

Decision

The decision of the Tribunal is that the reference is dismissed and the matter remitted to the Pensions Regulator.

Reasons

 

 

1.                  The Appellant runs a small hospitality business in Hadleigh, Essex. By this reference, it challenges a Fixed Penalty Notice ('FPN') issued by The Pensions Regulator ('TPR'), requiring it to pay a penalty of £400 for failing to comply with a Compliance Notice ('CN') issued on 22 April 2024 by the deadline of 3 June 2024. 

 

2.                  The matter came before me for determination on the papers, both parties 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 delivering written notification every three years of how the AE duties have been met, known as a 'declaration of compliance'. TPR has statutory responsibility for securing compliance with AE requirements.  If it is of the opinion that a declaration of compliance has not been delivered by the due date, it may issue a CN pursuant to section 35 of the Act [1], requiring the employer to deliver a notice of compliance by a specified date.

 

4.                   By s40 of the Act, TPR may issue a FPN in the sum of £400 [2] to a person if it is of the opinion that he or she has failed to comply with (among other things) a CN.  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)           A person to whom a notice is issued under section 40 or 41 may, if one of the conditions in subsection (2) is satisfied, make a reference to the Pensions Regulator Tribunal [3] in respect of—

(a)           the issue of the notice;

...

(2)           The conditions are—

            (a)           that the Regulator has completed a review of the notice under section 43;

            (b)          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)           when the reference is withdrawn or completed, or

            (b)          if the reference is made out of time, on the Tribunal determining not to allow the reference to proceed.

(4)           For the purposes of subsection (3), a reference is completed when—

(a)           the reference has been determined,

(b)          the Tribunal has remitted the matter to the Regulator, and

            (c)           any directions of the Tribunal for giving effect to its determination have been complied with.

 

7.                  In dealing with a reference the powers of the FTT are very wide.  The 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). 

 

8.1              The Appellant's Staging Date (ie the date on which the AE duties first applied to them) was 1 November 2017.

8.2              In July 2023, TPR sent a letter to the Appellant at its registered office, drawing attention to its obligation to complete the 'declaration of compliance' (for the current cycle) by the deadline of 4 April 2024.

8.3              In January 2024, TPR sent a further letter to the Appellant at its registered office, drawing attention to its obligation to complete the declaration of compliance (for the current cycle) by the deadline of 4 April 2024. The letter included (a) a link through which the declaration could be completed online and (b) a warning that failure to comply with AE duties might result in financial penalties being imposed.

8.4              In addition to the letters of July 2023 and January 2024, TPR sent to the Appellant approximately 11 emails (correctly addressed), reminding it of the deadline of 4 April 2024.

8.5              On 22 April 2024 the CN (already mentioned) was issued. It was correctly addressed to the Appellant at its registered office address, allowed it until 3 June 2024 to deliver the declaration of compliance and warned that it would be liable to a fixed penalty of £400 if it failed to meet the (extended) deadline.

8.6              On 13 May 2024 TPR telephoned the Appellant and left a message to remind it of the approaching (extended) deadline. The recipient of the call promised to pass the message on.

8.7              The Appellant did not complete the declaration of compliance by the due date (as extended), 3 June 2024. The FPN was issued over two weeks later, on 18 June 2024.

8.8              On 27 June 2024 the Appellant submitted to TPR its declaration of compliance and an application for review of the FPN.

8.9              On 28 June 2024 TPR refused the review application.

 

The appeal

 

9.                  The notice of appeal raises four points.  (1) The FPN and associated correspondence was confusing to the Appellant and its confusion was increased as a result of its subsequent call to TPR. (2) The postal address used was that of the Appellant's accountant and the postal correspondence (or some of it) did not reach the Appellant. (3) The Appellant had and continues to have financial difficulties. (4) The owner or guiding hand of the business has or had a mental health problem.

 

Discussion and conclusions

 

10.              I start by reminding myself of the terms of the applicable legislation (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 CN with a FPN. I next turn to the grounds of appeal.

 

11.              The Appellant's first point goes nowhere because (apart from anything else) it concerns events after the FPN was issued.

 

12.              There is nothing in the Appellant's second point. TPR was under no legal obligation to issue reminders at all. Moreover, the letters were sent to the Registered Office address. And there is no reason to suppose that the email reminders did not reach the Appellant.

 

13.              The third point is noted but it does not amount to a ground for allowing the appeal. The FPN was lawfully issued. As to its level, I acknowledge that for many small businesses the penalty is likely to be painful, but the sum is fixed by law at £400, and I have no power to reduce it.  Arrangements can sometimes be agreed with TPR for payment to be made by instalments.  

 

14.              Likewise, I note the fourth point, which I am sorry to read. But it is not said or suggested that the Appellant's failure to comply with the FPN was a result of a medical condition, and the Tribunal would need cogent, independent professional evidence to sustain an appeal on that basis.

 

 

 

 

Outcome

 

15.               For the reasons stated, I am clear that the Appellant has not demonstrated a good excuse for its failure to meet the requirements of the CN and accordingly I must dismiss the reference and remit the matter to the Regulator.  No further direction is required. 

 

 

 

(Signed)         Anthony Snelson

 

Judge of the First-tier Tribunal

 

Date: 14 February 2025

 

Decision given on: 26 February 2025