Guildford, United Kingdom (PressExposure) March 21, 2012 -- In the budget today the changes to QROPS were announced to be effected from 6th April 2012.
Geraint Davies, Managing Director of Montfort International Ltd and Offshore QROPS (A leading specialist QROPS and expatriate advisory firm) was quick off the mark at looking into the facts and has made the following statements:
2.69 Qualifying Recognised Overseas Pension Schemes (QROPS) -
The Government will introduce changes in primary legislation to strengthen reporting requirements and powers of exclusion relating to QROPS. They support the changes in secondary legislation published for consultation on 6 December 2011. The Government also announced that where the country or territory in which a QROPS is established makes legislation or otherwise creates or uses a pension scheme to provide tax advantages that are not intended to be available under the QROPS rules, the Government will act so that the relevant types of pension scheme in those countries or territories will be excluded from being QROPS. (Finance Bill 2013)
"It is evident that HMRC clearly want QROPS to remain available for the purpose they were initially set out for. There was in recent months growing evidence of processes being developed to bypass the intended purpose of the QROPS rules. Going forward schemes will need to be 100% certain that they are not operating in such a way that allows benefits to be paid out in a way that exceeds UK limits. With some procedures being marketed around the world whether intentional or not to bypass UK limits - the resunding message being delivered by HMRC is do it our way or don't do it at all. Any scheme that thinks all they have to adhere to is to meet UK's reporting requirements needs to take immediate action in order that they comply entirely with the HMRC intentions."
2.227 Information powers - Following consultation, the Government will legislate to extend HMRC's information powers to reflect international standards for transparency and exchange of information. (Finance Bill 2012)
"Financial advisers will need to be extremely careful when dealing with clients moving or coming in from overseas in that when they deliver advice that they ensure their clients are fully aware of their reporting obligations. With the movement between countries of an international labour force and with the arrival of QROPS being a main stream solution, advice has to be globally suitable and tax correct not just for their UK residents but for their clients who wander overseas whether permanently or temporarily.
Questions must be asked as to the processes involved when guiding a member of UK registered pension scheme to a QROPS proposition. This dilemma will catch many an adviser out both within UK and ex-UK. Tax jurisdictional issues are pertinent in any country a member or former member (now a QROPS member) of a Registered Pension Schemes Manual.
We are seeing a growing number of situations where advisers in jurisdictions ex-UK are delivering advice which may have semblances of being locally correct but in reality creates major tax consequences both here and abroad, which place the consumer in a difficult place. Do they own up and pray for leniency and pay up and then sue or hope that they are never caught? The adviser can only advise one way."