QROPS managers must tell HM Revenue and Customs when they are no longer a Qualifying Recognised Overseas Pension Scheme.
The managers are then obliged to keep reporting to HMRC about the benefits they pay retirement savers.
Once an offshore pension for expats is no longer a QROPS, HMRC removes the scheme from the official QROPS List published twice a month.
The list tells UK and QROPS pension managers that the scheme has self-certified it meets QROPS rules and subject to checks, that they can transfer client money to the scheme.
HMRC makes clear that including an offshore pension on the QROPS List does not mean the scheme has been given any approval or endorsement and that retirement savers and their advisers should carefully check the scheme to satisfy themselves that it is a bona fide QROPS.
Failing the QROPS test
If it fails the checks and money is transferred, HMRC will penalize the provider making the transfer and the retirement saver.
For savers, the penalty starts at 55% of the value of any tax-relieved fund.
Pension managers and HMRC can suspend schemes from the ROPS List for several reasons, including:
- The scheme does not qualify as a QROPS
- HMRC suspects the scheme does not qualify and is checking the pension’s rules
- The last pension member dies or transfers out of the scheme
“You’ll need to check that the scheme you’re transferring to on or after that date meets the new requirements,” says HMRC.
More than 400 QROPS delisted
“We can’t guarantee these are QROPS or that any transfers to them will be free of UK tax. It’s your responsibility to find out if you should pay tax on any transfer of pension savings.
“HMRC will usually pursue any UK tax charges and interest for late payment arising from transfers to overseas entities that don’t meet the QROPS requirements even when they appear on this list. This includes where the QROPS requirements have changed and where taxpayers are overseas.”
HMRC is also warning retirement savers to check that their QROPS are still valid pensions and have not been delisted.