Lucky Felicity Ltd v The Pensions Regulator

The reference is dismissed. The fixed penalty notice is upheld, and the matter is remitted to the respondent. No further directions are required.

This is a reference (appeal) in respect of a fixed penalty notice (FPN) with reference 127726850788 issued on 25 February 2025.

The appellant is an employer with a statutory duty to make relevant contributions to occupational or personal pension schemes. On 30 December 2024 the respondent issued an unpaid contributions notice (UCN) because the appellant’s pension provider had reported that contributions for the period 1 April 2024 to 31 October 2024 had not been paid. The UCN directed the appellant to do three things:

The deadline for compliance with the UCN was 10 February 2025. The UCN contained a warning that a failure to comply before the deadline could result in the issue of a FPN. It is asserted that the appellant did not contact the respondent in response to the UCN and no evidence of compliance was provided by the deadline.

This led to the respondent issuing a FPN in the sum of £400 on 25 February 2025. The deadline to pay was 25 March 2025.

On 1 March 2025 the appellant’s representative contacted the appellant’s pension provider (NEST) by email, to enquire about gaining access to their account and submitting payments. Access was granted on 24 March 2025 following completion of relevant forms.

The appellant requested a review of the FPN on 6 March 2025. The respondent conducted a review and on 7 March 2025 confirmed the FPN on the basis that no evidence that the unpaid contributions had been paid was provided.

On 27 March 2025 the respondent issued an escalating penalty notice (EPN) with reference 272364731104 given the ongoing non-compliance. The deadline for compliance was 23 April 2025. The EPN contained a warning that if the appellant failed to comply, the penalty would accrue at a daily rate of £50 from 24 April 2025. The respondent also issued a penalty reminder letter on 27 March 2025 in respect of the unpaid £400 penalty.

The appellant’s representative requested a second review of the FPN on 2 April 2025. In the request it is asserted that once access to the appellant’s account with the pension provided had been obtained, payment of the overdue contributions was made. No information about when the contributions were paid was provided and no evidence of payment was submitted.

On 4 April 2025 the respondent replied to the request for a review. The respondent declined to carry out a review of the FPN on the basis that the request was made after the 28-day deadline from the date on which the FPN was issued. The respondent decided to vary the EPN, extending the deadline to 30 April 2025 to give the appellant more time to provide evidence to demonstrate that the unpaid contributions had in fact been paid.

The appellant’s appeal to the tribunal is dated 21 April 2025.

On 9 June 2025 the respondent contacted the appellant to request further information, the purpose of which was to enable the respondent to decide whether to defend the appellant’s appeal. The appellant did not respond to the request. It does not appear that the respondent had received or was aware when it wrote to the appellant on 9 June 2025 of a further report from the appellant’s pension provider which was submitted on or shortly before 12 April 2025. The pension provider’s report notified the respondent that the appellant had complied with the requirement to pay the missing contributions. The respondent’s records were updated to show the appellant as compliant as of 12 April 2025 and it was recognised that as compliance had been confirmed before the extended deadline of the EPN (30 April 2025), there was no accrual period attached to the EPN.

The Pensions Act 2008 (the 2008 Act) requires employers to enrol job holders in occupational or workplace pension schemes. The respondent is required to ensure employers’ compliance with the 2008 Act and has specified powers under that Act to enable it to do so. Relevant provisions are:

Section 303(6)(a) of the Pensions Act 2004 (the 2004 Act) and regulation 15(4) of the 2010 Regulations create a presumption that notices are received by the employer when addressed to them and sent to their registered office or principal office address. However, that presumption is capable of being rebutted based on contrary evidence.

Section 44 of the 2008 Act allows a person to make a reference to the Tribunal in respect of the issue of a penalty notice or the amount of the penalty payable under the notice. Section 103(3) of the 2004 Act allows the Tribunal to consider any relevant evidence, even where it was not available to the Regulator. Section 103(4) provides that on a reference the Tribunal must determine what (if any) is the appropriate action for the Regulator to take. The role of the Tribunal is to make its own decision on the appropriate action to take, having regard to all the circumstances before it.

Section 43 of the 2008 Act provides such a reference is only permitted where the Regulator has reviewed the notice or if an application for a review has been made and the Regulator has determined not to carry out a review.

In the notice of appeal, the appellant states that they are challenging the decision with reference 272364731104, i.e. the EPN. The grounds of appeal however relate to the FPN.

The appellant’s grounds of appeal can be summarised as follows:

The respondent’s case can be summarised as follows:

The appellant requested that the appeal be determined at a hearing. The hearing was conducted remotely by video. The hearing was recorded, and the recording of the hearing stands as the record of proceedings.

I clarified the decision being challenged by the appellant at the outset, as it was unclear from the notice of appeal. Mr Shah confirmed that it is the FPN dated 25 February 2025 which is challenged. I also clarified whether it was accepted that the UCN and the FPN had been received by the appellant. Mr Shah confirmed that the appellant did not dispute that both the UCN and the FPN were received.

I asked Mr Shah to confirm the date on which he was instructed in relation to the appellant’s pension duties, as this was not apparent from the documents. He stated that he ‘received the letter from her’ in January 2025. I understood ‘the letter’ to be the UCN dated 30 December 2024. I also asked when payment of the unpaid contributions was eventually made. Mr Shah replied that he thought it was in March 2025. Mr Nicholson confirmed in his submissions that it was 7 April 2025.

Mr Nicholson and Mr Shah both made oral submissions, which I considered together with the documents contained in the hearing bundle before reaching my decision. The parties confirmed that all documents relied on were contained in the hearing bundle.

For the respondent, Mr Nicholson submitted that the appellant had failed to provide a reasonable excuse for their non-compliance. He relied on the fact that the breach began in April 2024 and had continued for 12 months by the time payment was eventually made on 7 April 2025. He submitted that the appellant could have remedied the breach before the deadline in the UCN, which is accepted was received by the appellant. Mr Nicholson submitted that the appellant failed to act diligently and delayed in instructing a new accountant given that the contributions were unpaid from April 2024.

Mr Nicholson accepted that it is open to employers to delegate the work required to comply with their duties to others, but that such delegation does not absolve them of their obligation to comply and submitted that in this case the employer ignored their duties for a significant period. In respect of the steps taken to remedy the breach, Mr Nicholson noted that it took the accountant approximately two months to make the first contact with NEST (i.e. between being instructed in January 2024 and 1 March 2024).

Based on the evidence, Mr Nicholson submitted that the UCN and the FPN were both correctly issued and that none of the grounds amount to a reasonable excuse. He invited me to find that the fixed penalty was properly issued and that the sum of £400 is recoverable.

Mr Shah submitted that the appellant had previously complied with their duties and that since the breach was remedied, they have continued to comply. Mr Shah referred to having been in contact with the respondent and NEST many times before gaining access to the NEST account. He submitted that the breach was unintentional and due to the difficulty in obtaining access to the NEST account, it was outside of the control of the appellant. Mr Shah submitted that the employer would suffer hardship if required to pay the £400 fixed penalty.

There is a single issue for determination in this appeal:

Based on the information before me, I find that the appellant was aware of the requirement to pay contributions and in fact was paying contributions before 1 April 2024. It appears that the appellant delegated this to their accountant, as it was the accountant who held the login details for the NEST account. The appellant changed their accountant on an unknown date, but I find that it was some time around 1 April 2024, which is when the breach began. I find that Mr Shah was not instructed in relation to the pensions contributions until January 2025 when the appellant provided him with the UCN. His oral evidence was consistent with the grounds of appeal where he states that this is when he became aware that the appellant was registered for pensions contributions.

I accept that Mr Shah took steps to try and obtain access to the NEST account when he became aware of the unpaid contributions. I accept that he contacted the previous accountant to try and obtain the account details, and while there was no documentary evidence to support his assertion that he contacted the respondent or NEST on multiple occasions, I accept that he did take steps to contact NEST on 1 March 2025 which resulted in access being granted. I also accept that Mr Shah ensured that the missed contributions were paid in a timely manner once access was obtained and that there is no evidence of any further breaches.

While I have accepted what happened between January 2025 and 7 April 2025 when the breach was remedied, there is no explanation from the appellant whatsoever as to why the breach occurred at all. This is what is relevant to the decision to issue the FPN and whether the appellant has provided a reasonable excuse. I find that the appellant has failed to provide a reasonable excuse for the breach of their duty between 1 April 2024 and 31 October 2024, the period covered by the UCN and in respect of which the FPN was issued.

Accordingly, I find that the FPN was properly issued and that the appellant is liable to pay the fixed penalty of £400. I heard submissions from Mr Shah about the hardship that this will cause, but this is not a matter for me. I am unable to reduce the amount of the penalty, which is prescribed in the 2010 Regulations. I note that in the response, it is stated that if the appellant does consider that paying the penalty in one instalment is likely to cause hardship, they may contact the respondent to discuss what payment options may be available.

The reference is dismissed.