In particular, they provide new detail as to how former QROP schemes are to be handled by their administrators. One of the biggest changes introduced by the draft regulations is a requirement that such schemes report any payment transfers within the same required 10 year period from the date of transfer that is currently required of QROP schemes, even though they no longer are, technically, QROPS.
However, say pension fund industry experts who have been studying the documents, there is some confusion as to how many of the new reporting requirements would apply to the hundreds of schemes delisted by HMRC last year. In particular they point to a paragraph in the draft guidance which states that the extension of many of the QROPS reporting requirements to schemes that are no longer QROPS "will only apply to schemes that ceased to be QROPS on or after [the date of coming into force of the proposed regulations]".
The new reporting requirements, the statement continues, "do not apply to schemes that ceased to be a QROPS before [the date of coming into force of the proposed regulations]".
Said one pension fund administrator, after studying the draft guidance for some time: "On re-reading all the documents I have put a call into HMRC for verification – hopefully I will get a call back soon."
As reported, the draft regulations come more than a year after an unexpected decision by HMRC to change the legislation governing QROPS led to the de-listing of some 310 out of Guernsey’s 313 then-existing QROP schemes. The Revenue is inviting comment on its proposals until 21 June.
Other key provisions included in the new draft regulations include a penalties regime for non-compliant former QROPS, and a system for scheme managers to re-notify HMRC that they meet the conditions to be a QROPS.
A relaxation of the so-called benefit tax relief test for overseas publish service schemes, and the pension schemes of international organisations, is also included.
Re-iterating its powers
Some pension industry executives saw HMRC’s latest batch of QROPS regulations as a reminder to the industry that it is "on the case" and has powers to exclude schemes if it chooses to, for any reason. Among them was Montfort International managing director Geraint Davies, who said the regulations were a reminder of the Revenue’s powers to remove QROPS status from schemes, even if they continued to meet the conditions required to be deemed a QROPS.
Others, such as Matthew Nash, technical and marketing director for Bristol-based Cradle Overseas Pensions, said the regulations needed to go further, "if consumers are to be protected in the QROPS market".
"The minor amendments appear to be a token gesture from HMRC to show that this is an area they are still looking into," he added.
"They really will have little effect. The whole regulation of QROPS, including advisory practices, needs an overhaul on a similar scale to the 2012 legislation changes. Otherwise consumers will continue to get extremely poor advice from some quarters."
HMRC’s enforcement powers over pension scheme administrators located outside of the UK are limited anyway, some experts pointed out. Said one international pension fund executive: "I am not sure how enforceable the [new information request clauses] would be under foreign laws. Presumably if [the company has] no UK operation, they will have to use tax information exchange agreements or double-tax agreements [to ensure compliance".
The big question, this executive added, was whether the "added paperwork will stop the abuse".
Money in retirement
Alan Kentish, the chief financial officer of Gibraltar-based STM Group, the London-listed company which provides pension schemes administered both in Gibraltar and Malta, said HMRC seemed to be mindful of its appointed role in ensuring that UK pensions are ultimately used for what they were originally intended to: to provide an income for individuals when they reach retirement.
The proposed regulations, he added, suggest that the Revenue is "listening to what is happening in the marketplace, and issuing guidance [aimed at ensuring that] providers stay on the straight-and-narrow, in ensuring that pension pots remain intact".
STM Fidecs technical manager Jane Caulfield noted that on a practical level, the draft regs filled in a lot of blanks that the industry had been wondering about. "In last year’s change of legislation, HMRC mentioned that there would be a five-year re-notification requirement for existing QROPS, but until now they did not provide details on how this notification was to be undertaken. So basically, this is, in many ways, a tidy-up of the legislative changes they brought in last year.
"Our position is that any clarification from HMRC is a good thing, particularly if it helps us to comply with the regulations."
‘New world’
Guernsey-based Concept Group was among the pension fund adminsitrators affected by HMRC’s actions last year. For Roger Berry, managing director, the Revenue’s latest batch of regulations seemed to be further evidence that "everyone, not just QROPS providers, is operating in a new world – one [in which] politics combines with a desperation to collect every penny of tax".
When combined with such other developments as "FATCA, the UK’s mini-FATCA, GAAR and the prospect of disclosure agreements being completed between governments", Berry added, it represents a "tsunami of change that is bringing us ever closer to full tax transparency and automatic information disclosure".
Click here to read about the removal of 310 Guernsey schemes last year
Click here to view the draft regulations on the HMRC website
