Monfort International managing director Geraint Davies says new Qrops rules could lead to a widespread crackdown on abuse of the pension schemes.
Last week, HM Revenue & Customs published Qrops rules which require schemes to report all payments to members for 10 years after they join. They also require schemes to report the payout of any benefits to HMRC in writing within 90 days rather than annual electronic reporting.
Davies says the new rules open up all Qrops to the scrutiny of the revenue.
He says: “This is a forerunner to a widespread investigation of Qrops and a crackdown on abuse. HMRC will want to stop people using these schemes to get their hands on some cash.”
The rules, which come into force on April 6, clarify that Qrops members will be able to take a tax-free lump sum as long as 70 per cent of the cash transferred into the scheme is ringfenced for retirement income.
Davies says the rules mean that Qrops essentially have to behave like a UK scheme, unless the member is not resident in the UK for five years, in which case they can decide for their scheme to run along local rules.
Davies says: “Any scheme that had money go into it after April 6, 2006 will have to account for all benefit payments.
“If the correct amount of money is not there, HMRC is going to want to know why.”