HMRC Change QROPS Rules

HMRC has issued several new rules governing QROPS to ensure the scheme is used legitimately

London, UK (Pryce Warner International) December 8th, 2011 – New legislation included in the 2012 Finance Bill shows new changes to how QROPS (Qualified Recognised Overseas Pension Schemes) work.

Requirements will be raised and prospective clients will need to be informed of potential tax charges when they first register.  HMRC introduced the new rules in part to ensure that previous cases of mis-selling do not occur in future.

One jurisdiction where this was a particular issue was New Zealand. Several providers were found to have sold the scheme as a tax avoidance measure and allowed clients to deposit all their pension assets in one go, referred to as “pension busting” by HMRC.

The legislation means that long term UK Expats will no longer be able to transfer their pension assets to New Zealand and immediately withdraw all their funds.

In the past the HMRC has come under fire for its treatment of those considered in violation of the rules as some claim certain aspects were not fully clarified by HMRC.

This led to members being required to pay tax charges in some cases, most notably in Hong Kong and Singapore.

The new legislation stipulates:

• New conditions a pension scheme must meet to be a QROPS

• An acknowledgement by the individual, to be completed before a transfer is made, that tax charges may apply

• Revised time limits for pension schemes to report transfers to QROPS

• New HMRC powers to request information from a QROPS

• New time limits for reporting payments by a QROPS to HMRC

HMRC state that these new measures are designed to ensure a fairer system and that they will make it easier for legitimate providers to comply with HMRC regulations.

David Retikin, Director of Operations at Pryce Warner International Group, a financial services provider for Expats commented: “We always welcome efforts by HMRC to clarify the regulations surrounding QROPS, as in the past providers in some jurisdictions have mis-sold the scheme and tarred the whole industry as a result. It is precisely for reasons of clarity and accountability that we only offer QROPS through Guernsey, where there is a strong link to HMRC and a stable regulatory body.”

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By: Aneil Fatania
Financial Editor
Pryce Warner International Group
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