RPSM13101600 - Technical Pages: international: Double taxation agreement relief: Notification of benefit crystallisation events

Notification of benefit crystallisation events

The wording of the applicable double taxation agreement (DTA) will determine whether or not the manager of an overseas pension scheme has to provide information about benefit crystallisation events occurring in respect of members where contributions have received UK relief after 5 April 2006.

If the DTA provides that relief on contributions to a pension scheme that is tax-recognised in the other country is subject to the same conditions as apply to contributions made to a UK tax-recognised pension scheme then relief will be subject to the manager undertaking to provide the same information about the member’s benefit crystallisation events as would be required if the member was receiving migrant member relief (see RPSM13101060). The relief provision in the DTA with Chile refer to the “same conditions” and so does the relief provision relating to personal contributions in the DTA with South Africa. Relief under those provisions is therefore subject to an undertaking having been given to HMRC by the scheme manager. Claims that have been accepted under those provisions of the Chilean and South African DTAs without an undertaking being given can stand, but future claims under those provisions should be supported by an undertaking.

Those managers of overseas pension schemes who as a condition of relief under a DTA have to provide HMRC with limited information following a benefit crystallisation event occurring in respect of a relieved member can do so by sending a completed APSS 252 form to HMRC by 31 January following the end of the tax year in which the BCE arises. The form must be sent to the following address:

There is no withholding requirement on scheme managers.

Members of overseas pension schemes who are liable to either a lifetime allowance charge or to a member payment charge must declare that liability on their Tax Return for the tax year in which the event giving rise to the charge occurred. Similarly, a UK tax-relieved member of such a scheme must declare any liability to an annual allowance charge in respect of contributions made by and on behalf of them or on the increase in value of their rights on their Tax Return for the tax year in question. Even if a member has not been served with a Tax Return they remain bound by the normal obligation to notify HMRC of their liability to a charge.

There is guidance on liability to an annual allowance charge and to a lifetime allowance charge where contributions made by or on behalf of a member of an overseas pension scheme after 5 April 2006 have been relieved under a DTA at RPSM13102300 and RPSM13102500.