HMRC make minor changes to QROPS policy. #pensions #ukpensions #pensiontransfer #retiringabroad #IN
12 Wednesday Dec 2012
The global QROPS industry breathed a collective sigh of relief this morning as HM Treasury released a Draft Finance Bill that contained only a relatively minor increase in reporting requirements for administrators of overseas pension schemes.
This year, the Overview of Legislation in Draft, as the Draft Finance Bill is formally known, appears to do little more than add a few new reporting requirements, including an obligation for scheme administrators that “every five years…[they] notify HMRC that [their] scheme continues to meet the conditions to be a QROPS”.
Failure to comply with this new rule, which is to be introduced in Finance Bill 2013, could lead to the scheme in question being excluded from being a QROPS, today’s draft legislation notes.
Secondary legislation is also due to be introduced, it goes on to say, that will require scheme managers to report to the Revenue any payments made out of transfers of pension savings they have accepted from UK pension schemes, “even when that scheme has ceased to be a QROPS since accepting the transfer”.
QROPS industry experts said these new reporting requirements reflected HMRC’s recently-renewed determination to ensure that the overseas schemes are used to provide pensions for people in retirement rather than, as some providers are said to have attempted to use them for, as a means of avoiding tax on a sum that, after five years, could be extracted from the pension structure in the form of cash.
“HMRC seem to be extending the onus on non-UK pension schemes that are QROPS to report and keep records in line with comparable UK pension schemes,” said John Batty, head of pensions at Momentum, the international QROPS provider.
Although there might be providers and advisers who will not welcome the added reporting obligations, Batty believes the industry should actually embrace HMRC’s apparent willingness to become more involved in QROPS oversight, as, he believes, investors will feel better about the schemes if they feel they are being properly regulated.