If an expat transfers their cash to an offshore pension scheme that’s not a Qualifying Recognised Overseas Pension Scheme (QROPS), the tax man will have little sympathy.
In a sharp notice published in the latest HM Revenue & Customs (HMRC) Pension Schemes Newsletter for providers and advisers, the tax man talks about ‘numerous requests’ received to check if offshore pensions are QROPS.
In no uncertain terms, HMRC states no responsibility will be taken for confirming whether any overseas pension is a QROPS.
Instead, the obligation is placed on the shoulders of the pension saver and the scheme administrator of the pension currently holding the funds to transfer.
What is a QROPS?
HMRC says to be a QROPS, both:
- The pension must match the rules required of a Registered Overseas Pension Scheme (ROPS)
- The scheme manager must tell HMRC the pension is a ROPS and that the ROPS will provide information about the scheme and the savers as required by law
HMRC must be told if the pension fails to meet ROPS rules
The tax man goes on to explain that the ROPS List published every fortnight never confirms that any of the schemes listed are QROPS.
“Just because a scheme is listed does not make it a QROPS, regardless of how long the scheme is on the list,” said HMRC.
“The list shows the pension manager has notified HMRC the scheme is a QROPS and agrees to provide the information we require. It does not mean the scheme actually is a QROPS.
“The individual and the manager of the scheme transferring the pension fund are responsible for making sure the scheme receiving the money is a QROPS.
“If the scheme is not a QROPS, HMRC will levy tax charges, generally 55% on the individual and 15% on the transferring scheme.”
HMRC suggest that pension savers and scheme administrators should carry out their own due diligence by asking for the receiving schemes trust documents to check that it is a QROPS.