The Government is to crack down on qualifying recognised overseas pension schemes due to concerns that the arrangements are being used to circumvent UK tax rules.
HM Revenue & Customs has proposed a number of revisions to secondary legislation for the Finance Bill 2012 which will increase the reporting requirements for Qrops.
The changes include requirements for the transferring saver to provide more detailed information before the transfer takes place, including a declaration that they understand that tax penalties could apply.
There is a requirement for the UK scheme to pass information relating to the transfer to HMRC within 30 days of the transfer taking place and the overseas scheme to report all lump-sum payments made from their scheme in the 10 years following the transfer.
The overseas provider must also provide more information about their scheme and the individuals running the scheme, including the names and addresses of the directors of the Qrops provider.
An HMRC statement says: “The Government has found that Qrops are being marketed extensively as a way of paying amounts or enabling the payment of amounts that are not allowed under UK rules (in particular 100 per cent lump sums) once the UK tax rules no longer apply.
“This is contrary to the policy rationale for allowing transfers of UK tax-relieved pension savings to be made free of UK tax to Qrops.”
AJ Bell technical marketing manager Gareth James says: “HMRC has made it clear that it intends to introduce these rules to deal with abuse of the Qrops system.
“The new reporting requirements will provide HMRC with the granularity it needs to immediately identify transfers it suspects are being made for what it considers inappropriate reasons.”
Mattioli Woods has recently launched a Malta-based Qrops.
Marketing and sales director Murray Smith says: “Qrops have a place, provided they are used properly. The problem has occurred where providers have marketed them as a way of avoiding paying tax.”