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HMRC makes 'unprecedented' offer to members of Hong Kong Qrops
by William Robins on Sep 07, 2010 at 11:20
HM Revenue and Customs (HMRC) has made an ‘unprecedented offer’ to exempt members of a Hong Kong Qrops from 55% tax charges after it revoked its approval for the scheme.
According to a letter seen by Citywire The Beazley Consulting Pension Scheme was given approval as a Qualifying Recognised Overseas Pension Schemes (Qrops) by HMRC in September 2007.
HMRC has now decided that the Qrops, which thousands of people are thought to have entered over a two-year period, should never have been given approval.
In a letter sent to members last week Beazley said: ‘HMRC…have now decided as a result of a technical nicety, that the Beazley scheme can never have been a Qrops. They have, as a consequence, revoked our status. Whilst we tried vigorously to persuade HMRC otherwise, by analysis of the terms and conditions of the scheme, this was insufficient and we feel unable to do anything further.’
Members of Qrops which lose approval in this way are liable to a 55% unauthorised payment charge including a 45% charge plus a 15% surcharge both dated from the time of the transfer.
However, HMRC has agreed to review the circumstances of each member’s transfer after negotiations with Beazley’s legal adviser, DLA Piper. Each review will look at the advice given to the member to establish whether the transfer into the Qrops was done ‘in good faith’ as part of retirement planning advice.
‘This is an entirely unprecedented and genuine offer by HMRC to manage the tax administration on a fair and equitable basis,' said Beazley in the letter. In order to achieve waiver of the charges, you need to demonstrate that you acted in good faith and had genuinely intended to transfer to a Qrops, with the sole intention of providing for your income in retirement.'
To qualify as a Qrops, the pension scheme must satisfy local regulations. In Hong Kong all pension schemes must have a sponsoring employer.
Beazley Consulting Pension Plan remains on the most recent list of registered Qrops published by HMRC, dated 3 September 2010.
HMRC said it would not comment on individual cases.
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10 comments so far. Why not have your say?
Adam Smith
Sep 07, 2010 at 12:58
"To qualify as a Qrops, the pension scheme must satisfy local regulations. In Hong Kong all pension schemes must have a sponsoring employer." That looks like a bit of a schoolboy error on the due diligence front then
report thisJohn Dalton
Sep 07, 2010 at 13:03
So what about Singapore?
report thisDavid D
Sep 07, 2010 at 13:04
So in other words, if the QROPS transfer was for a valid reason then they will probably allow it. However, if its an attempt to get round the rules they wont.
Given the number of dodgy QROPs transfers going on, it seems quite logical to look at it that way. In fact its too logical to be right!
report thisAnonymous 1 needed this 'off the record'
Sep 07, 2010 at 13:50
To John Dalton.
Decisions are made at scheme level so only memebrs of this scheme are impacted (although no charge is seemingly going to be made).
Therefore other schemes in Hong Kong are not impacted nor are schemes in other conutries or territories (such as Singapore).
report thisAndrew Setterfield
Sep 07, 2010 at 13:53
Qrops look ok on paper and bearing in my mind I have little good to say about life companies or fund management groups its a suprise i find myself unwilling to recommend anyone who is promoting a Qrops scheme!
The next financial disaster waiting to happen.
report thisDavid Trenner - Intelligent Pensions
Sep 07, 2010 at 14:17
Most QROPS are sold by non FSA registered advisers, so there will be no come back for the client when they go pear shaped.
Of course there are bound to be some good QROPS providers - but how on earth can anyone find out which they are? As this lot have demonstrated something which looks pukka may not be!
report thisJohn Dalton
Sep 07, 2010 at 14:41
To Anonymous
The point I was making was whether this does not give hope to those affected by the withdrawal of QROPS status from all Singapore schemes.
report thisAnonymous 1 needed this 'off the record'
Sep 07, 2010 at 14:50
Sorry John. And so true!
report thisAnonymous 2 needed this 'off the record'
Sep 07, 2010 at 23:24
HMRC understood that certain singapore schemes were not perhaps acting in the spirit of the QROPS rules so they made a decision to halt that location offering QROPS.
However they should provide guidance as to why they are now unravelling on a previously approved arrangement.
The 8-10% commissions available to unregulated non UK based advisors may speed the advice in the direction of QROPS. In this my experience bears out the views of David Trenner.
PS what does anyone think of Section 615 pension schemes?
report thisAlan Davis
May 27, 2011 at 12:02
There are many good QROPS providers available, but one that is close to theU.K would appear to offer the best options.
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