The draft finance bill recently issued by the Government signalled some potentially far reaching changes to QROPS legislation. A brief consultation period has been agreed and new regulations will come into force on 6th April 2012.
We have been warning for some time that the practice of “pension busting” by some advisers offering full encashment of a UK pension fund would ultimately lead to HMRC carrying out a full review of QROPS. Their publication actually states “The Government has found that QROPS are being marketed extensively as a way of paying amounts or the enabling of amounts that are not allowed under UK rules (in particular 100% lump sums) once the UK tax rules no longer apply.”
The stance adopted by some so called experts and many unregulated advisers in using New Zealand QROPS, which were primarily designed for those moving to that country, and offering them to unsuspecting UK expatriates living in Spain as a way to access 100% of their accumulated pension fund, in clear violation of HMRC regulations, whilst at the same time evading local taxes on those funds brought into Spain, will at long last be a thing of the past. Whether HMRC and the Spanish tax authorities choose to follow through and take action remains to be seen. Hopefully we will now see an end to the often misleading and sometimes downright illegal promotion of “the way to unlock your UK pension fund”.
What is clear is that more stringent regulations will be put in place and the rules changed to ensure that pension busting is a thing of the past. One specific recommendation is that the reporting period to HMRC which currently lasts for five years is extended to ten and that payments to members are reported within 60 days rather than annually.
At Fiduciary Wealth we have always advocated that QROPS strictly followed the current guidelines and fundamentally provided clients with an income for life. We would never allow clients to be put into a position where a 55% unauthorised tax charge might apply maybe years after their QROPS has been established or their assets frozen as has been the case in some QROPS jurisdictions.
If you are eligible to transfer your pension to QROPS (that is you are tax resident outside of the UK or intend to exit UK within the next twelve months) or indeed unhappy with your current arrangement, then it would make sense to consider your options now rather than wait until a new set of rules are in place. Of course legislation might be retrospective but you will be confident in knowing that your QROPS will meet the rules as currently set out, that your QROPS is an approved scheme and listed by HMRC as such and that the advice you will be receiving is ethical, regulated and with your best interests paramount.
For an initial consultation speak to one of our advisers now on + 350 200 50982 or alternatively email email@example.com