RPSM14101050 - Technical Pages: Transfers: Recognised transfers from registered pension schemes: Qualifying recognised overseas pension scheme

Qualifying recognised overseas pension scheme

[s169 & The Pension Schemes (Information Requirements- Qualifying Overseas Pensions Schemes, Qualifying Recognised Overseas Pensions Schemes and Corresponding Relief) Regulation 2006 – SI 2006/208]

Under section 169 a qualifying recognised overseas pension scheme is a recognised overseas pension scheme that meets certain requirements. Some of those requirements are prescribed under regulation 3 of The Pension Schemes (Information Requirements - Qualifying Overseas Schemes, Qualifying Overseas Schemes and Corresponding Relief) Regulations 2006. The scheme manager must:

• have notified HMRC that the scheme is a recognised overseas pension scheme, and have provided evidence of that if required,
• have informed HMRC of the name of the country or territory in which the scheme is established. If this is not an EU Member State, Norway, Liechtenstein, Iceland or a country or territory with which the UK has a Double Taxation Agreement which contains exchange of information and non-discrimination provisions (see RPSM14101046), the scheme manager must also provide evidence that the scheme fulfils the requirement set out at the third bullet point in RPSM14101040,
• have provided any other evidence required by HMRC,
• have undertaken to notify HMRC if the scheme ceases to be a recognised overseas pension scheme, and
• have undertaken to provide HMRC with certain information on making payments in respect of certain scheme members (see RPSM14101070).

A scheme manager must send the requisite notification and undertakings to

A Form ( APSS251), which has been designed to help, can be used by a scheme manager to provide notification. In response to such a notification HMRC will send the scheme manager a letter of acceptance that the scheme is a qualifying recognised overseas pension scheme. The letter will show the unique QROPS reference number for that scheme. Details of the qualifying recognised overseas pension scheme will be entered on the Pension Schemes Services (PSS) database. HMRC may ask the scheme manager for more evidence before issuing a letter of acceptance (or rejection).

Where it is proposed to transfer the rights of a member of a registered pension scheme to an overseas pension scheme the transferring scheme administrator, the member, or their financial adviser, can check if the scheme appears on the list of QROPS that is published on the HMRC internet site. This list is updated twice a month. A scheme’s name will be deleted from the list as a matter of urgency if it ceases to be a QROPS.

Where the administrator of a registered pension scheme has relied on the current published QROPS list when making a transfer to an overseas pension scheme they should have just and reasonable grounds for asking HMRC to discharge their liability to a scheme sanction charge if it transpires that the overseas scheme was not a bona fide QROPS and is subsequently withdrawn from the list by HMRC. This is on the basis that the scheme administrator is expected to have carried out reasonable checks. Before making an overseas transfer the administrator should have checked the published QROPS list, and in particular must have done so no more than one day before the transfer was made. The administrator should keep a note of the date on which they checked the list (and also retain a copy of the overseas scheme’s QROPS acceptance letter if this has also been obtained).

Administrators of registered pension schemes should seek confirmation from HMRC regarding the status of a scheme that is on the published QROPS list only as a last resort, if there is doubt about the bona fides of the scheme.

Because of HMRC confidentiality rules the list does not include those schemes that have not consented to go on it. And PSS will not be able to answer queries about the QROPS status of an unlisted overseas pension scheme unless it has received from the manager of that scheme written authorisation for it to disclose whether or not the scheme is a QROPS. The letter or form providing authorisation must be signed by the manager of the overseas scheme in order for PSS to answer the query.

Administrators of registered pension schemes can also phone the PSS helpline to:

• ask if an overseas pension scheme has been accepted as a QROPS since the last list was published, although PSS will not be able to answer such an enquiry if it is waiting to find out if the scheme is prepared to go on the published list, and
• check if the omission from the latest published list of a scheme that had been included previously was due to the loss of its QROPS status

As the manager of an overseas pension scheme that is a QROPS will have received a letter of acceptance from PSS another way of checking on an unlisted scheme’s status would be to ask the manager for sight of that letter.

UK scheme administrators and members should be aware that a transfer may not be permissible even though an overseas pension scheme is a QROPS. QROPS status has significance for UK tax purposes only. Whether or not a transfer to a QROPS can be made will depend also on the scheme being able to accept a transfer under the legislation of the country in which it is established. In particular, it is PSS’ understanding that transfers to US “qualified” retirement plans, including individual retirement arrangements (IRAs), cannot be made as such plans are not permitted to accept a transfer of funds from a UK registered pension scheme. UK scheme administrators and members should contact the relevant overseas authority for confirmation, not PSS.

Exclusion of Scheme

In addition, the scheme must not have been excluded from being a qualifying recognised overseas pension scheme.

A scheme may be excluded from being a qualifying recognised overseas pension scheme if HMRC decides that there has been a significant failure to comply with any information requirements, and that it is inappropriate that transfers from registered pension schemes to the recognised overseas pension scheme should be recognised transfers. A failure will be significant if a substantial amount of information has not been provided or if the failure to provide information is likely to result in serious prejudice to the assessment or collection of tax.

HMRC must notify the person or persons appearing to be the scheme manager that the scheme has been excluded. The scheme manager can appeal to the General Commissioners of Income Tax (or to the Special Commissioners) against an exclusion decision. The appeal must be made within the period of 30 days beginning with the day on which notification of the decision was given. It is also possible for HMRC to decide that a scheme is no longer excluded.

If a scheme is excluded from being a qualifying recognised overseas pension scheme it can no longer receive a recognised transfer under section 169.