The government is to tighten the rules governing Qualifying Registered Overseas Pension Schemes (Qrops) in a bid to clamp down on abuse of the schemes. In December 2010 Gibraltar and Singapore were struck off the QROPS Countries list.
According to draft legislation as part of the 2012 Finance Bill, Qrops reporting requirements will be raised and savers will need to be notified of the potential for further tax charges at outset.
HM Revenue & Customs (HMRC) said it had tabled the reforms due to concerns about ‘abuse' of the current system.
The Revenue has been criticised for failing to provide clarity over the schemes, after it moved against a number of Qrops that had appeared on its registered list of schemes, hitting members with tax charges.
The proposals include:
- New conditions a pension scheme must meet to be a Qrops
- An acknowledgement by the individual, to be completed before a transfer is made, that tax charges may apply
- Revised time limits for pension schemes to report transfers to Qrops
- New HMRC powers to request information from a Qrops
- New time limits for reporting payments by a Qrops to HMRC
HMRC said: ‘This measure will ensure a fairer tax system by making changes to the system of transfers of pension savings from registered pension schemes to QropsHMRC said: ‘This measure will ensure a fairer tax system by making changes to the system of transfers of pension savings from registered pension schemes to Qrops
‘The changes are intended to improve compliance with the Qrops regime so the main impact is likely to fall on those who are seeking to use the regime in a way that was not originally intended.’