On November 22nd 2013, the total number of QROPS reached a new record high of 3,230.
In addition, advisors are seeing more people enquiring about the QROPS legislation, either due to fewer incentives to keep pension pot in the UK, the dismantling of age-related benefits, or perhaps to protect their fund from further changes to UK legislation.
The record high and the fuel for growth are not the only recent drastic changes. The industry has undergone significant modifications over the last couple of years as HMRC attempts to simplify legislation and stop tax abuse and fraudulent changes in the market.
But the question remains: Have these changes made it easier for independent financial advisers (IFA) to participate in the QROPS industry and help clients who wish to move their pension abroad, or has it put them off?
Rosiip
In June 2013, the Singapore Rosiip QROPS delisting was a landmark case within the industry. HMRC was taken to court by members of the scheme after HMRC condemned the scheme as unlawful and ordered customers to pay a tax charge of 55%.
However several factors led to a decision in the High Court in favour of the consumers – and not HMRC – which was branded as aggressive” and “shameful” by the judge.
Afterwards HMRC released guidance stating it would not to “raise or pursue any assessments … where the transfer to the scheme took place before 24 September 2008; the scheme was included on the list as a QROPS when the transfer took place … and the scheme was not a QROPS.”
This statement come with a proviso however – that HMRC may pursue cases which bear evidence of “dishonesty, abuse, artificiality or any similar circumstance.”
Whilst this seems simple enough, many advisors believe yet more clarity is needed, for instance over when action might be taken on schemes which have been listed on the HMRC QROPS list.
QROPS list
As seen in the Rosiip case, problems can arise due to the self-certifying nature of the QROPS legislation.
Admittance onto the QROPS list is not a confirmation from HMRC that the scheme is valid and follows legislation, as the QROPS provider is expected to certify the scheme meets the standards itself.
In addition, as the legislation takes transfers into account before 2008, if you transfer took place after – or indeed is taking place in the future – the onus is more on you and your QROPS provider to ensure the scheme follows QROPs legislation.
You may therefore want to check yourself that the scheme complies with QROPS legislation, or only consult with a regulated financial advisor who can complete all the due diligence necessary to ensure the scheme is valid.
A regulated IFA with experience in the QROPS market can supply you with a broader background of the QROPS industry, ensure your circumstances are right for a transfer, and highlight the best jurisdiction and scheme for your needs. In addition, it is the experienced IFAs in the market who stay abreast of all QROPS legislation changes and therefore have the knowledge to ensure your fund is protected.
Possible delisting scenarios
On a side note, it is important to bear in mind that a delisting is not always the bad news it appears to be.
Sometimes, a provider closes the scheme temporarily in order to sort out any compliance issues, or HMRC and the QROPS provider wish to look into administrative issues.
In addition, in the past HMRC has been known to make its own delisting mistakes – and exclude schemes or even entire financial jurisdictions in error – something that is usually rectified promptly.
