Working in partnership with you

PPF/Experian – A case study…don’t leave it too late!

A regular check-up at the dentist is certainly not on the top of many to do lists. However, periodic checks can save a lot of pain and, from my experience, a lot of money!

Similarly, monitoring the Experian score for the principal and participating employers of your pension schemes on the PPF/Experian portal could save you from a painful and costly PPF levy in September/October each year, as evidenced by this case study…

A client approached us in June 2018 with concerns about a jump in the Experian score of Company A and what impact it would have on their PPF levy.

With very little initial information, it was evident that the score had worsened significantly in December 2017, around the time Company A had filed their accounts with Companies House. The levy band had fallen from Band 3 (as it had been for the previous two levy years) to Band 6 and our calculations indicated a doubling of the levy from £150,000 to £300,000.

A simple explanation could have been that one of the metrics from Company A’s new accounts (i.e. profit before tax) had fallen or that Company A had taken a recent secured loan resulting in a new “Mortgage Charge”. This would have provided some reasonable objective justification for the rise in the levy.

However, it was neither of the above and required closer inspection…

The wider Group had undergone restructuring over the year. As a result, it was decided that Company B, another entity within the Group, would no longer file consolidated accounts as it had done previously and it would instead file individual accounts. Why would this impact Company A’s Experian score? Company B was deemed to be the Ultimate Parent of the Group and therefore the metrics for this entity were used to measure “Parent Strength” on Company A’s scorecard.

As a result of filing non-consolidated accounts, as per the PPF’s determination, Experian performs a manual consolidation of the UK-only entities in the Group to produce a Parent Strength score. As you can imagine, in a case where the Group has significant operations across Europe, not including non-UK entities in the overall strength assessment produced a worse snapshot of the Group. It was this manual consolidation that was behind the doubling in the PPF Levy.

As we gathered more information from the client, it transpired that the auditors (one of the “Big 4”) had produced fully audited consolidated accounts for Company B (alongside the individual accounts). However, as these were non-statutory, they had not been filed with Companies House.

We used our relationship with Experian and PPF, as well as our understanding of the determination to ensure that the “non-filed” accounts were used for future levy years. This was particularly important as the Group has extended their year-end, which would mean their financials are not going to change on Companies House for at least the next two levy years. In the absence of any other changes, our actions here will give a levy saving of roughly £200,000 over two years.

Frustratingly, if we had been engaged prior to 31 March 2018, we would have also been able to save the client another £100,000 for the 2018/19 levy year. In any case, we are appealing on behalf of the client as it transpired the manual consolidation produced by Experian had missed one of their largest UK subsidiaries!

Our service at Quantum Advisory is not limited to simply reviewing the data, we also provide sensitivity analysis to highlight options where the levy can be reduced significantly. As mentioned, we have developed a strong relationship with the PPF and Experian over recent years which has helped to garner significant levy savings for several of our clients.


Kanishk Singh - Consultant
T: 0121 726 7062