Regulation 4 Constitution and value of employer resources

(1)

For the purposes of section 38E(2)(a) of the Act (Section 38 contribution notice: meaning of “employer resources test”), what constitutes the resources of the employer are the profits of the employer before tax.

(2)

For the purposes of section 38E(2)(b) of the Act and subject to paragraph (5), the value of the resources of the employer is to be determined, calculated and verified as follows—

(a)

the value of the resources of the employer excluding the effect of the act or failure to act is the profits before tax as stated in the annual accounts of the employer for the assessment period, adjusted to exclude the effects of non-recurring or exceptional items;

(b)

the value of the resources of the employer including the effect of the act or failure to act is the profits before tax as stated in the annual accounts of the employer for the assessment period, adjusted to—

(i)

exclude the effects of non-recurring or exceptional items; and

(ii)

account for any effect of the act or failure to act on the value of the resources of the employer as if the act had occurred or the failure first occurred immediately before the beginning of the assessment period.

(3)

For the purposes of paragraph (2), the Regulator may determine—

(a)

whether an item is to be treated as non-recurring or exceptional;

(b)

the value of any non-recurring or exceptional items;

(c)

the effect of the act or failure to act on the value of the resources of the employer.

(4)

When determining the matters set out in paragraph (3)(a) or (b), the Regulator must have regard to the relevant financial reporting standards relating to accounting practices published by the Financial Reporting Council Limited.

(5)

Where paragraph (6) applies, the Regulator may determine, calculate and verify the value of the resources of an employer for the purposes of paragraph 2(a) and (b) by reference to a period which the Regulator deems appropriate.

(6)

This paragraph applies where—

(a)

the employer’s annual accounts do not cover the assessment period;

(b)

the employer is not required to prepare annual accounts pursuant to the 2006 Act; or

(c)

the employer’s accounts are not prepared in compliance with section 395 (Individual accounts: applicable accounting framework)^f1 or section 403 (Group accounts: applicable accounting framework)^f2 of the 2006 Act.

(7)

The Regulator may disregard any alteration of the accounting reference date where an employer does so—

(a)

in a case where the act or failure to act forms part of a series of acts or failures to act, after the first act or failure to act;

(b)

in any other case, after the act or failure to act occurred.

(8)

In making a determination under regulation 4(3) or (5), the Regulator must take into account all relevant information in its possession and, having done so, no further verification is required.

Annotations

Footnotes

f1: Section 395 of the Companies Act 2006 was amended by S.I. 2019/685, S.I. 2012/2301, S.I. 2008/393, S.I.2019/145 and S.I. 2012/2301.
f2: Section 403 of the Companies Act 2006 was amended by S.I. 2019/685, S.I. 2012/2301, S.I.2019/145 and S.I. 2012/2301.