Administrators UHY Hacker Young have warned that Hartley Pensions is expected to run out of money by the end of January, increasing the risk of liquidation.
UHY Hacker Young told FT Adviser that the income received from management charges is insufficient to trade for the foreseeable future and therefore the money is expected to run out by the end of the month.
They explained that there was the possibility to use other company money, which is separate from the trading funds, but said “this cannot be utilised if there is a risk that it cannot be repaid”.
UHY Hacker Young added: “The administrators have also obtained an offer of funding for £2mn from a third party and a contract has been agreed but not yet signed.
“The administrator cannot enter into this contract in good faith if there is a risk that it cannot be repaid.”
The administrators said following some discussions with the proposed representative respondents, there were concerns that their preference would be for the company to go into liquidation.
“This would result in the administrator ceasing to trade, hence the concerns above that there is a risk of not repaying loans,” they said.
If the company goes into liquidation or ceases trading due to insufficient funds then HMRC’s guidelines are that if there is no operator they have the discretion to de-register the Sipp’s which then attracts a 40 per cent tax charge.
UHY Hacker Young said: “All of the requirements to de-register a Sipp would be met if the company ceased trading or goes into liquidation and therefore, there is no firm reason to believe the Sipps would not be deregistered and HMRC have not said otherwise.”
Contentious matters
Elsewhere, FS Legal, who acts on behalf of representative respondents, warned Hartley matters were getting more ‘contentious’.
In a letter sent to Hartley clients, seen by FT Adviser, FS Legal said it would not work on a contingent basis in that they would only get paid if UHY Hacker Young’s £40mn exit and administration charge application is granted.
FS Legal said: “We feel that tying our payment to you paying an EAC of £40mn creates a clear conflict of interest. It effectively takes our ability to say ‘no’ (which is a key part of any negotiation) off the table.”
As reported, UHY Hacker Young has applied to court to ratify an ‘exit and administration’ charge that the administrators would make against the assets clients hold within their Sipps.
This will replace the current annual management fees Sipp clients are being charged and will enable them to eventually transfer out.
The administrators have issued the court application with a hearing date set for February 29 and March 1.
FS Legal is seeking funding from clients with regard to the legal costs involved in representing the respondents.
