Pattinson Builders Ltd v The Pensions Regulator [2025] UKFTT 360 (GRC)

[2025] UKFTT 00360 (GRC)Case reference: FT/PEN/2024/0272
First-tier Tribunal
General Regulatory Chamber
Hearing Heard on: 25 March 2025Date 27 March 2025
Pensions Regulation
Heard by Cloud Video Platform
Before
Judge SOPHIE BUckley
Between
PATTINSON BUILDERS LTDAppellantThe PENSIONS REGULATORRespondentMr. Pattinson for AppellantMs Fadero (solicitor) for RespondentDecision:The reference is dismissed and the matter is remitted to the Regulator. The Escalating Penalty Notice is confirmed.REASONS

Background

[1]Pattinson Builders Ltd (the Employer) challenges an escalating penalty notice (the Escalating Penalty Notice) issued by the Pensions Regulator (the Regulator) on 26 April 2024 (Notice number 268350323427).[2]The Escalating Penalty Notice was issued under s 41 of the Pensions Act 2008. It required the Employer to comply with a Compliance Notice by no later than 23 May 2024. If the Employer failed to comply a penalty would accrue at a daily rate of £500 from 24 May 2024.[3]The Regulator completed a review of the decision to impose the penalty notices and informed the Employer on 26 June 2024 that the Escalating Penalty Notice was confirmed. The Employer referred the matter to the Tribunal on 17 July 2024.

The Law

[4]The Pensions Act 2008 imposed a number of legal obligations on employers in relation to the automatic enrolment of certain ‘jobholders’ into occupational or workplace personal pension schemes. The Pensions Regulator has statutory responsibility for securing compliance with these obligations and may exercise certain enforcement powers.[5]Each employer is assigned a ‘staging date’ from which the timetable for performance of their obligations is set. The Employer’s Duties (Registration and Compliance) Regulations 2010 specify that an employer must provide certain specified information to the Regulator within five months of their staging date. This is known as a ‘Declaration of Compliance’. An employer is required to make a re-declaration of compliance every three years. Where this is not provided, the Regulator can issue a Compliance Notice and then a Fixed Penalty Notice for failure to comply with the Compliance Notice. The prescribed Fixed Penalty is £400. Where the Regulator is of the opinion that an employer has failed to comply with a Compliance Notice the Regulator can issue an Escalating Penalty Notice.[6]Under s.44 of the 2008 Act, a person who has been issued with a Fixed Penalty Notice or an Escalating Penalty Notice may make a reference to the Tribunal provided that a review has been carried out or an application for review has been made to the Regulator. The role of the Tribunal is to make its own decision on the appropriate action for the Regulator to take, considering the evidence before it.[7]The Tribunal may confirm, vary or revoke a penalty notice and when it reaches a decision, must remit the matter to the Regulator with such directions (if any) required to give effect to its decision.

Evidence

[8]I read and took account of a bundle of documents.[9]The respondent applied for permission to rely on a small number of additional documents that showed the number of employees declared by the Employer. Although Mr. Pattinson had not had the opportunity to consider those documents, he accepted that he had had at least 5 employees at all material times and did not challenge the basis of the calculation of the daily rate. In those circumstances I allowed the documents to be added to the bundle.[10]I heard submissions from Mr. Pattinson and from Miss Fadero.

The facts

[11]The Employer’s second re-declaration of compliance was not completed by the deadline of 18 January 2024, so the Regulator issued a Compliance Notice on 29 January 2024 with a deadline of 11 March 2024. As this was not complied with, a Fixed Penalty Notice was issued on 27 March 2024 requiring the Employer to pay a penalty of £400. The Fixed Penalty Notice required the Employer to comply with the Compliance Notice by 24 April 2024. As the Employer did not comply, the Escalating Penalty Notice was issued on 26 April 2024 under which a penalty would accrue at a daily rate of £500 from 24 May 2024.[12]The re-declaration of compliance was completed on 11 June 2024.[13]On 19 June 2024 the Employer, via its accountant, requested a review of the Escalating Penalty Notice. This was out of time but the Regulator conducted a review of its own initiative and the penalty was confirmed on 26 June 2024. The Employer made a further review request on 4 July 2024 and the Regulator determined not to carry out a review because it was out of time.[14]On 17 July 2024 the Employer referred the matter to the Tribunal.

Submissions

[15]The Notice of Appeal relies on the following ground:(i) The registered address of the Employer is his accountants, but the accountants have failed to forward or notify the Employer of the Notices until 7 June 2024.(ii) Once the Employer was made aware that the re-declaration was due it acted quickly to submit the re-declaration.[16]In his oral submissions Mr. Pattinson said that he had used the same individual accountant at Peel Walker for 20 years and he had never missed any deadlines. After Peel Walker were taken over by Walter Dawson the individual accountant used by the Employer left.[17]Mr. Pattinson submitted that his accountants had said that they had not received the letters from the Regulator, apart from the one that they had forwarded to him that he had opened, nor had they received the voicemail that the Regulator had left. He said had spoken to their receptionist, Anne, and she said that they forwarded the letter that they had received and that she could not remember getting any others. Mr. Pattinson stated that he remembered opening the letter and that the accountant had stuck his home address on the envelope over the top of the accountant’s address. That was the letter giving notice of the £2400 fine.[18]Mr. Pattinson said that he took action as soon as he received the letter. He said that he is not passing blame to anyone but there has been a miscommunication. He said it is a small business and the fine would potentially ‘put him under’. Mr. Pattinson said that the fine is excessive.[19]I asked him if he had provided a new email address to the Regulator when the new accountants had taken over. He replied that the accountants had been monitoring the old email address for a period of time but had not informed him when they stopped doing so and they had not forwarded any emails from the Regulator to the Employer.[20]The Regulator’s response submits that the Notices were sent to the registered office address and there is no basis for displacing the statutory presumption of service of the Compliance Notice, Fixed Penalty Notice or Escalating Penalty Notice.[21]The Regulator submits that it was for the Employer to ensure that it received all its mail and/or made arrangements to ensure that its post was handled and dealt with properly. It remains the Employer’s obligation to comply even if they engage accountants to assist them in doing so. Reliance on third parties does not constitute a reasonable excuse.[22]The Regulator said that it sent two reminder letters to the Employer in May 2023 and another in October 2023. The Regulator also sent a number of emails. Although some of those emails bounced back the Regulator submits that it is the duty of an employer to ensure that it provides a valid email address.[23]The Regulator submits that it was fair, reasonable and appropriate to issue and maintain the penalty at the amount set by the 2010 Regulations.[24]Miss Fadero reiterated the points set out in her response in her oral submissions.

Conclusions

[25]The Regulator sent all the notices to the registered office address of the Employer, which was the address of its accountants.[26]The evidence in relation to whether or not the notices were received by the accountants is conflicting. The accountants, in an application for a review dated 19 June 2024 stated:
“The re-declaration notices were being sent to our office In Elland, which we then send straight on (without opening) to the client. The client has not received this post, and the only time he has seen anything is when we opened the post and emailed to the client instead. The client then processed the declaration straight away. The individual in the business who was able to send the declaration, left and did not explain there was a deadline or when this was. The client is just a general builder who would have made his best effort to complete the declaration had he been aware earlier. He is extremely concerned and this is causing some distress to him that the business did not submit the declaration by the deadline as he likes to be on time with his business obligations. We would like to appeal on the grounds that the client did not have receive the post, he was not made aware by a leaver of the business and once he was aware there was a declaration to submit he did this straight away.”
[27]This letter suggests that the re-declaration notices were received at the registered office address, but forwarded, unopened, to Mr. Pattinson. In those circumstances the notices would have been properly served and received at the registered office address, even if Mr. Pattinson did not ultimately receive them. Further, the letter states that the only time Mr. Pattinson had seen anything was by email rather than by letter.[28]In the grounds of appeal, Mr. Pattinson stated that the accountants had received the notifications but had failed to forward them or notify him of the notices.[29]In the hearing, Mr. Pattinson stated that he had spoken to the accountants’ receptionist, Anne, and she said that they sent on the one letter that they received and that she could not remember getting any others. I asked Mr. Pattinson if it was right that he had only received an email notification from his accountant rather than a letter, but he stated that he remembered opening the letter and the accountants had stuck his home address on the envelope over the top of the accountants’ address. That was the letter giving notice of the £2400 fine.[30]I accept that Mr. Pattinson was giving a truthful account of events, as reported to him, but the accountants have given two conflicting versions. Further, the version in the letter is not consistent with Mr. Pattinson’s evidence that he did receive at least one letter that was forwarded to him by post (rather than being notified by email).[31]Bearing in mind those inconsistencies, in the absence of any explanation why three properly addressed letters should not have arrived, and taking account of the presumption of service, I find that the Compliance Notice, the Fixed Penalty Notice and the Escalating Contributions Notice were all properly served and received at the Employer’s registered office address.[32]The timely provision of information to the Regulator, so it can ascertain whether an employer has complied with its duties under the 2008 Act, is crucial to the effective operation of the automatic enrolment scheme: unless the Regulator is provided with this information, it cannot effectively secure the compliance of employers with their duties. It is for this reason that the provision of a re-declaration of compliance within a specified timeframe is a mandatory requirement. Even though the Employer has now complied with this duty, this does not excuse a failure to comply.[33]I accept that the Escalating Penalty is very burdensome for a small employer, but the amount is fixed by law and not a matter of discretion.[34]I find that issuing the Escalating Penalty Notice was appropriate, unless there was a reasonable excuse for the Employer’s failure to comply with the requirements of the Compliance Notice.[35]I have sympathy for Mr. Pattinson, because it appears that his accountants have let him down, but I conclude that the Employer did not have a reasonable excuse for failing to comply.[36]Although the Employer does not appear to have delegated the responsibility for completing the declaration of compliance to the accountant, it has delegated responsibility for ensuring that action is taken in relation to post received at the registered office address.[37]It is in my view not likely, in the absence of any evidence, for example, about difficulties with the post, that the accountants properly forwarded both reminder letters and all three notices and that all five letters simply got lost in the post. It is more likely that something went wrong with the Employer’s system, either at the accountants’ end in that they did not forward the correspondence, or that the letters simply got missed when they arrived with Mr. Pattinson. Either way, it remains the Employer’s responsibility for the purposes of these proceedings. It is the responsibility of an employer to ensure that there is an appropriate system in place for correspondence to be read and acted upon.[38]It remains the responsibility of the Employer to comply with its obligations, even if uses the services of a third party to assist it in doing so. The actions of the accountants do not, I find, amount to a reasonable excuse.[39]In addition, the declaration of compliance had been completed, and the Employer ought to have known when the re-declaration was due. The Employer should have been aware of its obligations. The Regulator is not obliged to send reminders. It does however send reminders. Two reminder letters were sent to Mr. Pattinson at the address he provided in the notice of appeal in May 2023 and in October 2023. Both of those letters included the date for compliance. The Regulator also sent a number of reminder emails. It is not clear whether or not that email address was still monitored by the accountant at the time they were sent, but the Employer is responsible for ensuring that the Regulator has up to date contact details.[40]For the above reasons I am satisfied that the Employer has not provided a reasonable excuse for not complying with the Compliance Notice. I determine that issuing the Escalating Penalty Notice was the appropriate action to take in this case. I remit the matter to the Regulator and confirm the Escalating Penalty Notice. No directions are necessary. Signed Date: Sophie Buckley 26 March 2025