Tribunal Upholds Penalty for Pension Non-Compliance in CPC (Worcester) Limited v The Pensions Regulator: Emphasizes Legal Obligations and Lack of Excuses

Citation: [2024] UKFTT 133 (GRC)
Judgment on

Introduction

In the case of CPC (Worcester) Limited v The Pensions Regulator [2024] UKFTT 133 (GRC), the First-tier Tribunal (General Regulatory Chamber) addresses the application of legal principles surrounding penalty enforcement by The Pensions Regulator for non-compliance with automatic enrolment duties under the Pensions Act 2008. This analysis aims to pinpoint the critical elements that led to the Tribunal’s decision and the legal foundations that underscore it.

Key Facts

CPC (Worcester) Limited (the Appellant) was issued a fixed penalty notice by The Pensions Regulator (the Respondent) for failing to comply with a compliance notice, subsequently appealing to the Tribunal. The Appellant had failed to meet the deadline for submitting their second re-declaration of compliance, which is mandated by the Pensions Act 2008 to ensure employer adherence to automatic enrolment pension duties.

The Regulator had made consistent efforts to remind the Appellant of their duties. Despite these reminders and the extension of deadlines, the Appellant failed to comply in time, leading to the fixed penalty notice for non-compliance.

The Tribunal’s decision was guided by the following legal principles and statutory provisions:

  1. Service of Notice (Pensions Act 2004, Section 303): The decision reaffirms that notices must be served at the recipient’s “proper address,” namely a company’s registered office or principal office. A statutory presumption exists that a notice addressed and posted to the proper address is duly delivered and received.

  2. Assessment of Compliance (Pensions Act 2008, Sections 35 and 40): The Pensions Regulator has the authority to issue compliance notices for contravening employer duties and fixed penalty notices for non-compliance. The Tribunal examines the evidence to confirm whether the Regulator’s actions were appropriate and within their statutory responsibilities.

  3. Test for Reasonable Excuse (Pensions Regulator v Strathmore Medical Practice [2018] UKUT 104 (AAC)): The concept of “reasonable excuse” for compliance failures was considered. However, the Tribunal concluded that financial difficulty, postal issues, and lack of awareness were not acceptable excuses for the failure to comply.

  4. Judicial Review (In the Matter of the Bonas Group Pension Scheme [2011] UKUT B 33 (TCC)): The Tribunal is empowered to make its own decisions on appeals, distinct from the Regulator’s, including if the original decision fell within a range of reasonable responses.

Outcomes

The Tribunal dismissed the appeal and upheld the fixed penalty notice. Key determinations included:

  • The Appellant’s failure to provide a declaration of compliance by the extended deadline constituted non-compliance justifying the penalty.
  • The service presumption of the compliance notice at the registered office was not successfully rebutted by the Appellant, rendering claims of non-receipt unsubstantiated.
  • The purported non-reliability of the postal service and Appellant’s failure to change address details at Companies House to avoid confusion did not constitute valid reasons for non-compliance.
  • As the financial hardship and stress due to the COVID-19 pandemic did not excuse the failure to comply, this did not create grounds for a reasonable excuse under the legal principles governing pension regulations.

Conclusion

In summary, CPC (Worcester) Limited v The Pensions Regulator demonstrates that the Tribunal firmly supports the regulatory framework established by the Pensions Act for employer duties toward automatic enrolment. It underscores that ignorance or misunderstanding of one’s legal obligations, postal delivery issues, and even financial difficulties do not constitute a “reasonable excuse” for non-compliance. The Tribunal reaffirms that employers are expected to be proactive and responsive in adhering to their pension obligations, and the Tribunal’s role is to enforce compliance and not to provide relief based on subjective hardship.

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