The changes, which were not anticipated by the overseas pensions industry, were issued as part of the draft Finance Act 2012 legislation published earlier on today.
Initial feedback from the industry suggests the impact of the regulation, as it stands, could be far reaching.
Some of the changes, as understood by International Adviser, so far are:
- The five year non-resident rule for scheme reporting will be changed to 10 years from the date of transfer
- QROPS must be recognised for tax purposes in their country of establishment
- Individuals will have to acknowledge the tax implications of moving their pension out of the UK – this could be a requirement prior to successful transfer of a scheme
David Higgins, international pension specialist at The Overseas Pension – a Guernsey-based QROPS provider, said he is concerned that HMRC may be trying to “use a hammer to crack a nut” with the draft legislation and believes the industry should come together to lobby against the proposals.
“It is hugely important that representation is made to HMRC and that it is made in a non hysterical, cohesive way,” said Higgins.
“The industry’s response must be clear, accepting of certain aspects of the industry which are not working, and must include a proposal for how QROPS can continue while meeting HMRC’s policy objectives.”
In a statement, HMRC said:
- “The Government has found that qualifying recognised overseas pension schemes (QROPS) are being marketed as a way of obtaining payments from UK pension savings that, under UK rules, would lead to tax charges
- Today the Government is setting out the purpose of the QROPS regime and what it expects from those who use it
- The Government’s intention is to ensure that the rationale for allowing transfers to QROPS to be made free of UK tax is followed
- Draft legislation to amend the QROPS regime is published today for consultation on whether changes to revise the conditions a scheme has to meet to be a QROPS and to strengthen the information and reporting requirements have been successfully reflected in the draft legislation
- The consultation closes on 31 January 2012. Subject to comments received, legislation will take effect from 6 April 2012
- The Government is preserving the ability for those intending to leave the UK to take their pension savings with them to continue saving and provide an income when they retire.”
