New regulations for managing Qualifying Recognised Overseas Pension Schemes (QROPS) that have ceased but still hold funds for members have been published by HM Revenue & Customs (HMRC).
The proposals introduce new reporting requirements for scheme managers – although the draft guidance is under consultation and no start date for the rules is set.
The proposed rules address what happens to a pension scheme that is no longer a QROPS and as such has no requirement to tell HMRC about any changes to the scheme set-up, payments to members or onward transfers of funds to another scheme.
The new regulations will only apply to QROPS that are delisted from the start date of the new regulations – so QROPS delisted before that date in Guernsey, Cyprus or Singapore and other financial jurisdictions are unaffected.
Under the proposals, scheme managers will have to:
- Tell HMRC about any payments made by the QROPS
- Reply within set time limits to information requests from HMRC
- Inform HMRC about scheme changes within 30 days of the update or within a timeframe agreed with HMRC
The reporting rules will only halt when:
- The QROPS no longer holds any funds transferred in from a former UK registered pension
- The information due to be reported is more than 10 years old and the member it relates to is not resident in the UK nor has been resident at any time in the tax year or any of the prior five tax years.
QROPS that fail to make timely reports will face penalties.
One major change to the regulations is HMRC can compel a third party to give information about a QROPS or an annuity bought with QROPS funds for up to 10 years without asking permission of the scheme member or a tax tribunal.
This gives HMRC a wider power to gather evidence and pursue tax issues, as the current rules only allow the tax man to seek the information from a
- Registered pension schemes
- Annuities purchased from registered pension schemes (or pre 2006 scheme) funds
- Employer-financed retirement benefits schemes (EFRBS).
Older information can be chased, providing a senior HMRC official signs off the request.