The Pension Regulator Prosecutes Stott Tours over Auto Enrolment Offences

The Pension Regulator Prosecutes Stott Tours over Auto Enrolment Offences

Oldham based bus company Stotts Tour was recently fined for failing to enroll its employees into a workplace pension by the Brighton Magistrates’ Court. The court ordered the company to pay a fine of £27,000 and its director Alan Stott to pay £4,455. In addition to this amount, the company also has to pay an estimated £10,000 in backdated pension, £7,400 in costs, £14,400 in accrued civil fines for failing to comply with auto-enrolment and a £120 victim surcharge. This case marks the first time when The Pensions Regulator (TPR) launched a prosecution against employers who have failed to enroll its employees into a workplace pension.

Case Against Stott Tours

Stotts was established in the year 1963 in Oldham as a coach business and later on in 1986, it entered into the bus service business. In its prime, it was running various services like 398, 413, 414/424, 416/417 running across Grotton, Oldham, Waterhead and other important places. It purchased West Yorkshire Passenger Transport Executive buses, South Yorkshire Passenger Transport Executive Daimler Fleetlines and a large fleet from former Greater Manchester Transport Fleetlines.

In early September 2017, TPR launched its prosecution process against the company where it accused the business of not complying with section 45 of the Pensions Act 2008. On 10 November 2017, TPR found that Stotts was not paying to 36 employees who should have been placed into a workplace pension scheme. It also found that payments for these should have been done from June 2015. On February 2018, the company and its director were ordered to pay a fine of amount close to £60,000.

What does it mean for other employers?

Most of the employers do comply with automatic enrolment; however, there are some employers who choose not to follow the law by denying the staff the pensions they are entitled to. To ensure that the employees are paid their due amount in pensions, TPR is aggressively following up on companies which seem to have avoided auto-enrolment responsibilities.

TPR’s clampdown on multiple companies has ensured that most of them have started to get their staff enrolled in a suitable workplace pension. It has also started publicly sharing the names of pension plan trustees who were fined for neglecting to complete plan returns. This case is supposed to be a warning to other employers who are yet to ensure compliance with auto-enrolment duties.

Failure to comply with automatic-enrolment duties is considered as a criminal offense and the employer might have to face serious consequences. In a crown court, a maximum of two years imprisonment can be given to the offender whereas in a magistrates’ court the offender can be imposed with an unlimited fine.

Similar Fate for Dominic Chappell

Dominic Chappell, the former owner of BHS, was ordered by Barkingside magistrate’s court to pay £50,000 fine and £37,430.84 in court costs. This comes in addition to the demand of £10m made by TPR for helping the 19,000 members of BHS’s pension funds. After the collapse of the company, Chappell was ordered to hand over all the documents related to the pensions of the employees estimating a total worth of £571m. However, Chappell refused to respond to all the notices to provide necessary documentation in April and May 2016 and in February 2017.

Conclusion

The case of Stott Tours highlights the fact that employers should follow the pension regulations seriously otherwise they may be fined heavily in addition to the fact that they would have to suffer damaged reputation and a criminal conviction. Employers should immediately hire an expert in the workplace pensions to ensure that TPR does not come knocking on their door.

Also See: Small Business Accountants in Manchester

About the author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.