The First-Tier Tribunal of the Tax Chamber has held that the retrospective registration of a floating charge in relation to a loan which had already been repaid by the time the charge was registered was not sufficient for the loan to satisfy the requirements of an authorised employer loan (Nilebond Limited v HMRC).  

One of the conditions for a loan from a pension scheme to an employer to be an "authorised employer loan" (and thus not give rise to an unauthorised payment) is for the loan to be secured by a charge that takes priority over any other charge.  Under the Companies Act 2006 (CA 2006), a charge against a company's assets must be registered within 21 days beginning with the day after creation of the charge unless an order allowing an extended period is made under section 859F(3) of CA 2006.  Failure to register within the statutory timescale means the charge will be void against a liquidator, administrator or creditor of the company.  

In the case in question it was common ground that the charge in question had not been registered within 21 days.  The loan in question had been repaid, and there had been no other charge on the company's assets during the lifetime of the loan.  After HMRC sought to impose a scheme sanction charge on the grounds that the loan had been an unauthorised payment, the scheme administrator obtained a court order under the relevant provisions of CA 2006 extending the period for registration.  The order was made without prejudice to the rights of any person acquired during the period between the creation of the charge and the date of its actual registration.  The charge was subsequently registered within the extended deadline.

The Tribunal agreed with HMRC that the loan had not been "secured by a charge" because throughout the existence of the loan, the pension scheme had been in exactly the same position as any unsecured creditor.  It was not possible to amend that defect by retrospective registration.

Our thoughts

This judgment underlines the importance of ensuring that a charge is registered within the 21 day deadline where a scheme makes a loan to an employer company.