HM Revenue & Customs has issued clarification that residential property is not a permitted investment within qualified recognised overseas pension schemes before or after the five-year reporting period.
The note, published online in an HMRC manual last week, states that an unauthorised payment charge is not dependent on how long a member has been non-resident. It says: “It applies regardless of whether or not a transfer member has been non-resident for more than five tax years. Nor is there any time limit on the requirement that the manager of a Qrops reports to HMRC any payments that are referrable to a transfer member’s taxable asset transfer fund.”
Advisers say HMRC’s decision to reiterate this in its legislation is due to misinterpretations by schemes and advisers is a new step. AES International managing director Sam Instone says: “A couple of Guernsey providers have been putting exotic investments into their Qrops, such as residential property, fine wine and antiques, and bending the rules, so HMRC has issued clarification.”
Global Qrops director Paul Davies says: “There was probably a lot of ambiguity about what you could and could not do after the five-year period for investments so HMRC has reconfirmed its position in plain English. Anyone transferring their UK pension across to a Qrops cannot under any circumstances use that money within a Qrops to invest in residential property.”