HMRC has drastically cut the number of Hong Kong-based Qualifying Recognised Overseas Pension Schemes (QROPS) on its most recent listing of offshore options, which now shows just two providers compared to 25 previously.
Established in April 2006, QROPS allow UK pensioners who take up residency overseas to transfer their pensions into another jurisdiction. HMRC's list, which is published twice a month, is based on information provided by non-UK schemes when they give notification that they meet the conditions required to be a QROPS.
The latest list published at the beginning of August has only two companies based in Hong Kong: Asia Alternative Asset Partners Ltd Retirement Benefits Scheme and David Watt Retirement Benefits Scheme. HMRC had earlier told QROPS providers in Hong Kong that it was studying all QROPS pensions based in the jurisdiction to ensure that they met with the established requirements.
The decision to delist a number of Hong Kong-domiciled QROPS received strong support from Nigel Green, CEO of the financial advisory firm deVere, who described the move as 'proactive' and 'positive'.
'As we suspected - and hoped - HMRC are now taking a more proactive approach to reviewing which jurisdictions should and should not be on its QROPS list. The Revenue is now more determined than ever, it would seem, to weed out those schemes which many would argue should never have been on the list in the first place,' Green said.
Last month, what HMRC described as a 'technical glitch' resulted in the delisting of 432 schemes in error. In June, HMRC withdrew from a court case involving investors in a Singapore-based scheme called ROSIIP. The judge ordered HMRC to make a statement on its treatment of QROPS, and the department said it was conducting a high level review of how QROPS operates.
HMRC does not verify the information given by QROPS, and inclusion on the list does not mean that a scheme has been approved. However, in cases where a scheme administrator can show that the latest list was consulted in good faith one day before a transfer was undertaken, HMRC says that this will normally be sufficient grounds to discharge any liability to the scheme sanction charge and unauthorised payments surcharge, although there may still be an unauthorised payment charge liability for the member.
