HMRC faces industry criticism over Qrops clampdown
A group of senior representatives from pensions industry trade bodies has questioned HM Revenue and Customs over its recent clampdown on overseas pensions schemes, raising concern that the “policy intention does not match the legislation”.
HM Revenue & Customs has introduced new qualifying registered overseas pensions schemes regulations in April so that the treatment of pension savings in these schemes is in line with those under UK registered pensions schemes.
This resulted in a number of schemes being removed from the HMRC approved list for Qrops, including more than 300 in Guernsey.
The minutes of HMRC’s May pensions industry stakeholder forum, which is attended by senior pensions industry representatives from bodies such as the Association of British Insurers and the Association of Consulting Actuaries, highlighted concern that the “rationale for Qrops had not been articulated clearly until now”.
HMRC responded that the Qrops regime, a world-wide system, had to comply with EU law “so not all of the policy intention is reflected in the legislation”.
Members also raised a query over sums that were held in Guernsey pension schemes in particular. HMRC confirmed that sums that had been transferred to Guernsey schemes when they were Qrops would not be subject to UK tax charges now that they were no longer considered as such.
However, it said that the payments would have to be within the Qrops rules.
Qrops regulations, updated from 6 April 2012, are now subject to a new test to see if pension schemes meet the requirements for being a Qrops along with new reporting requirements.
There are also new reporting timescales for transfers of 60 days for UK schemes and 90 days for Qrops.
A new provision has been introduced for Qrops to report payments made for 10 years from the date of transfer, this is in addition to the current requirement to report a payment made when the member may be subject to tax charges.
Furthermore HMRC highlighted that some Qrops have offered access to lump sums or have been sold as tax free schemes. The intention is that the new legislation will make sure that pensions savings are protected as they would have been had the member and their pension saving remained in the UK.