Investors need to “think very carefully” before transferring a UK pension into a qualifying registered overseas pension scheme, as HM Revenue and Customs’ “dubious” approach means there is a constant risk of high penalty charges, according to one sector expert.
Helen Relf, private client group director at accountancy Baker Tilly, said at a minimum investors should seek specialist advice before “risking their hard-earned pension savings” after a spate of high profile aberrations highlighted problems with HMRC’s handling of Qrops.
In particular, last month the revenue was defeated in a high profile High Court action over its decision to remove a Singaporean Qrops from its approved list, leaving investors facing hefty unauthorised pension charges.
The Rosiip scheme was on the Qrops list in 2006, but HMRC subsequently removed it from the list in May 2008 having discovered issues with it. This resulted in more than 120 scheme members who had transferred their pensions in good faith facing a 55 per cent tax charge.
HMRC, which was criticised by the judge for behaving in an “aggressive” and “shameful” manner, has previously admitted that it does not perform checks on firms prior to placing them on the list and that such procedures are typically carried out retrospectively.
Ms Relf also highlighted another “final embarrassment”, which saw more than 430 Qrops “mistakenly deleted from the Qrops list due to technical failures.
She said: “Individuals moving abroad or employed overseas may need to think very carefully before transferring UK pension savings to an overseas pension scheme – or potentially face an eye-watering fine.
“Those looking to transfer their pension pots would be wise to take specialist advice before risking their hard-earned pension savings on an overseas transfer, but the effort can be worthwhile – Qrops still certainly have their advantages.”