Partially upheld: SIPP administration failure - failure to monitor and flag absence of rental income from commercial property; failure to identify connected party occupation; potential unauthorised payment reporting obligations complaint against AJ Bell Securities Limited

Decision detail

Summary

Miss K complained about AJ Bell's administration of a commercial property held in her SIPP. The property was leased to Mr E from completion in November 2020 but no rent was ever paid. Miss K's business subsequently occupied the property from 2021 without paying rent, a fact AJ Bell only discovered in August 2024. Significant rent arrears accrued, potentially constituting an unauthorised payment under HMRC rules with serious tax consequences. Miss K sought to reduce the arrears through various adjustments including renovation costs, a COVID rent concession, and reclassification of pension contributions as rent. The ombudsman found AJ Bell should have flagged the absence of rental income earlier but upheld the complaint only in part, awarding £300 for distress and inconvenience, as Miss K bore greater responsibility as property manager and business owner.

The Ombudsman's reasoning

AJ Bell had an obligation to HMRC to monitor whether all rent is received when due and should have flagged the prolonged absence of rental income to Miss K earlier. However, Miss K bore greater responsibility as the property manager and owner of the business in occupation. She knew rent was due and not being paid, and failed to inform AJ Bell that her business had taken up occupation. The arrears arose primarily from non-payment by Miss K's business, not from AJ Bell's failure to act sooner. Even if AJ Bell had intervened earlier, there is no guarantee Miss K's business would have been in a position to pay rent. Miss K was clearly informed of the serious HMRC consequences of non-payment by a connected party. AJ Bell acted reasonably in requiring further evidence for a COVID rent concession and in determining allowable renovation costs based on professional surveyor advice. The employer contributions were made on Miss K's instruction and cannot be reclassified as rent payments.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website