Compliance issues on Australian superfund come to light

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Compliance issues on Australian superfund come to light

An Australian superfund listed on the recognised overseas pensions list - P Wyns Age 55 Super Fund - is not compliant with the Australian tax office, indicating that HM Revenue and Customs may not be complying with rules it has delineated.

FTAdviser understands that this means it has not had an audit which is in line with the 2007/1600 Statutory Instrument - something put in place to clarify what constitutes an Australian scheme.

Its principal regulations impose various requirements that need to be met in order for a scheme to be an overseas pension scheme and a recognised overseas pension scheme.

Geraint Davies, managing director at Montfort International, said this “puts us in a curious space” as to what HMRC do, as strictly speaking those Australian schemes affected have received unauthorised payments.

“They seem to have missed the prerequisites of being in possession of an Australian compliance notice before receiving a pension transfer into what they were saying met UK requirements,” he commented, wondering how HMRC will respond.

“This leads to issues for advisers who go through burning hoops to meet UK requirements only to be told it was never an issue.

“What if we say we can’t advise a transfer to that scheme because its none compliant with what we believe are the requirements, yet the regulators ignore the facts? There is a need for clarity from the regulators as to what checks need to be in place when delivering advice to those clients who have the rights to transfer to an overseas scheme, which is essentially everybody.”

Mr Davies also questioned whether there are four sets of rules now in existence, HMRC’s interpretation of Statutory Instrument 2007/1600, the industry’s understanding, what the UK regulator thinks and finally what Australian advisers believe.

“What we need is absolute clarity, or else someone is going to get hurt. As we see it you cannot transfer without confirmation from the Australian authorities that this is a compliant scheme; Australian advisors started to lobby HMRC and put them under pressure to relent on the Pension Age Test.”

FTAdviser asked HMRC whether the fact that P Wyns Age 55 SuperFund is not compliant with the Australian tax office meant that this indicated HMRC was not complying with Statutory Instrument 2007/1600; with a spokesperson responding: “We do not comment on identifiable schemes or jurisdictions.”

In June this year, HMRC told the Australian Treasury that Australian superannuation funds no longer comply with its rules under the new pension age test for them to remain a Qrops.

These funds have the facility to allow recognised overseas pensions. HMRC’s pension age test requires schemes to assert savers are not able to access funds before the age of 55 in line with UK law.

At that time, the Australian Superannuation Funds Association told affected parties the HMRC’s position on the case, as a result of what it understood to be a “high-level” discussion between the Australian Treasury and HMRC about Qrops in June 2015.

ruth.gillbe@ft.com