Rowanmoor Pensions is warning advisers they could face regulatory action if they recommend the transfer of pension schemes to Ireland as a way of avoiding tax.
The small self-adminis-tered scheme provider’s warning follows news that pension scheme trustees are being contacted by firms offering them the chance to avoid tax if they transfer their scheme to Ireland.
In Ireland, pension funds can be transferred to an app-roved retirement fund and there is no requirement to purchase an annuity.
On death, the fund can be left to beneficiaries, although it would be subject to Irish inheritance tax at a rate of20 per cent.
Rowanmoor director of consultancy David Seaton says: “It is our understanding that some practitioners are offering to establish trading companies, employment contracts and even accommodation to UK companies in an attempt to break the UK pension scheme rules.
“IFAs who get involved in such practices are likely to become the subject of enquiries by The Pensions Regulator, HM Revenue a& Customs and the FSA .
“I was told that requirements for a transfer to Ireland are that an Irish selfdirected trust, like the UK Ssas, can only be established by a genuine Irish registered company trading and there must be a proper employer-employee relationship.
“The Irish scheme must obtain the status of a qualifying recognised overseas pension scheme from the UK HMRC, as, without Qrops status, the transfer from the UK scheme will be an unauthorised payment, which could result in a combined tax charge of 104 per cent.”