Retirement

HMRC Still Suspects QROPS Are Breaking Pension Rules

Some Qualifying Recognised Overseas Pension Scheme (QROPS) financial centres may still be breaking UK pension rules.

News reports emerging in Gibraltar suggest HM Revenue and Customs (HMRC) is asking QROPS jurisdictions to reaffirm their offshore pensions for expats comply with UK legislation only 14 days after a deadline passed calling for the same information.

When the latest HMRC QROPS List of providers self-certifying their pensions were compliant was published, 410 QROPS and nine financial jurisdictions were delisted, while one jurisdiction was added.

HMRC has announced suspension of the QROPS List again on June 2, with a new list due on June 5, with jurisdictions having to confirm for a second time they are compliant.

The measure suggests HMRC believes some providers or jurisdictions have wrongly signed off they meet UK QROPS rules.

Dilemma for retirement savers

Retirement savers planning a QROPS transfer face a dilemma because HMRC will not give details of the status providers or jurisdictions.

For those making a QROPS now, their due diligence may show the scheme is compliant, but by June 5, the status may change.

HMRC has not announced how penalties may apply to transfers made between April 18 and June 5 if a QROPS is later found to be non-compliant.

As QROPS transfer penalties start at 55% of the value of tax-relieved contributions switched between schemes, the amount can be significant for many retirement savers.

The other issue is expats may transfer UK pension cash to a QROPS only to find the scheme is no longer considered a QROPS.

New suspension on the way

The report also calls into question HMRC’s handling of QROPS.

Presumably the tax authority has had the time and resources available to check compliance, which has been an ongoing issue for the pensions since they were introduced in April 2006.

The latest list suspension was announced as part of a pension newsletter only circulated to professional agents, although the notes are available online if consumers know where to look.

If not, the move has not been widely reported outside the financial trade press.

No notice of the suspension is on the QROPS List page online, while the page has not been updated with changes since April 14, despite the mass delisting

HMRC was asked for a comment, but had not replied at the time of publication.

QROPS Information and Guidance

For more information about QROPS and the benefits it provides, download the iExpats QROPS Guide or complete the Get Advice form.

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