The deadline for certifying or re-certifying contingent assets, in order to secure a PPF levy reduction, is 5.00pm on 31 March 2014.
In a change in policy, a contingent asset can be re-certified even if it was not used for PPF purposes last year, as long as it has been certified in one of the previous five years.
If trustees are intending using a group or parent company guarantee (type A contingent asset) then the certificate must state that "The Certifier has no reason to believe that each Certified Guarantor, as at the date of the certificate, could not meet its full commitment under the Contingent Asset as certified."
To be able to make the statement above, the trustees are required to assess the guarantor's financial strength. The PPF does not prescribe what information should be considered In some cases trustees may want to commission specific advice or consider obtaining a letter of comfort from the guarantor about its financial position, in order to provide them with the confidence that they can give the required certification. The assessment of the capability of the guarantor to meet any sum that may fall due under the guarantee should be made on the assumption that the employer has become insolvent. Where trustees have previously carried out a review of the guarantor that is consistent with the PPF Guidance, it will generally be acceptable to update that review by reference to what factors may have changed rather than to undertake a wholly fresh exercise.
Full details of the 2014/2015 levy determination and the requirements for the certification of contingent assets can be found here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
