QROPS Rules Still Unclear After New HMRC Guidance

318

QROPS Rules Still Unclear After New HMRC GuidanceThe latest HM Revenue & Customs guidance over Qualifying Recognised Overseas Pension Schemes (QROPS) is as clear as mud.

In granting a tax amnesty to Singapore QROPS Rosiip investors after a London High Court debacle, the new guidance fails to clear up any of the ambiguities over transferring a UK pension to an offshore QROPS.

The latest announcement appears to be in response to the failed court action earlier this year.

Singapore QROPS investors challenged tax assessments issued by HMRC on the grounds that they were cleared to transfer their money into the Rosiip because the QROPS was mentioned on the official list published by HMRC.

The QROPS later turned out to fail qualifying rules, making their pension transfers unauthorised withdrawals attracting a tax penalty of 55%.

QROPS list problem

The investors argued they would not have switched their cash if they had known the Rosiip was not a QROPS, so the tax assessments were unfair.

HMRC run up the white flag and withdrew when seeing the writing was on the wall and the case faced defeat.

So where does the new guidance leave expats and international workers considering transferring their pension to an offshore QROPS?

The QROPS list is still the problem.

Unless the terms and conditions statement changes when the next list is published on December 1, 2013, everything is much the same.

Inclusion on the QROPS list means the trustees have self-certified their pension meets the qualifying rules. HMRC states no one approves or checks the schemes but takes the trustees at their word. If the pension is later found not to qualify, the members face a tax charge of at least 55%.

Due diligence

HMRC expects retirement savers to carry out due diligence to check the scheme, but the ambiguity is the rules also say an onshore provider cannot transfer cash to a QROPS that is not on the list, which infers listing makes a pension a QROPS.

Taking the new guidance at face value, HMRC seem to have made a move to placate the Singapore QROPS investors and the judge, who demanded a written policy statement from HMRC that has never been made public.

The action also follows standard HMRC policy of shifting the compliance burden to pension savers and taxpayers and then chasing them afterwards with penalties because they have failed to meet the complicated rules.

What QROPS investors and advisors need is a list that defines once and for all if a pension is a QROPS to cut out all this nonsense.

Leave a Reply