How a SSAS helped a business to expand

Our client wanted to expand

The opportunity arose for our client to acquire and develop a plot of land adjacent to their business premises.  This coincided with an ambition to purchase an expensive item of machinery to assist in the Company’s ambitions to expand. The Company had insufficient funds to do both, but they did have a SSAS.

A SSAS was the first port of call

A short time before these events, we had established a SSAS for the benefit of the Directors of the Company.  Company contributions had been accumulated – with the expectation of using the SSAS as a vehicle for future property purchase.    The SSAS was, therefore, the first port of call for the new land/property development proposition.

A major problem arose following the land survey.  Contamination was suspected.  A thorough exploration of soil and rock strata was considered necessary before the SSAS trustees could authorise the property purchase.  Time was short – too short to enable the explorations to be undertaken.

The Company Directors were very sure that their acquisition of the available site would deliver multiple benefits for the Company – irrespective of whether possible land contamination might be found.

All options for funding the property purchase were considered.  The bank showed interest – but held reservations in view of the uncertainty over the site value.  The Directors decided that the Company’s overriding interest in site acquisition and the purchase of new machinery must rule the day. It was therefore decided that the trustees of the SSAS would make a loan to the Company to fund the machinery purchase, secure the loan by means of a “chattel mortgage”  (backed up by adequate valuation) and so permit the capital remaining in the Company to be used for site acquisition.

An excellent final outcome

The outcome was for sensible usage of SSAS funds, a commercial rate of interest upon the monies lent, the easing of the Company’s capital position and the acquisition of the property upon which the Directors’ accepted the inherent value risk.  A sweet final outcome was completed and subsequent site investigation revealed an uncontaminated plot!

At PML we aim to deliver excellence in self administered pension schemes. If you would like to see what we can do for you, please contact us for an initial, no commitment, chat.

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