Since HM Revenue & Customs introduced sweeping legislation over the use of Qualifying Recognised Overseas Pensions Schemes at the beginning of this year, legislation which effectively closed prominent QROPS jurisdiction Guernsey to new business, Qualifying Non UK Pension Schemes have become more ubiquitous.
The schemes are largely targeted at people still living in the UK who are saving for retirement, but have reached their lifetime allowance, and can be used to bolster these savings.
However, Bethell Codrington, global head of TMF International Pensions, is warning that some of the advertised benefits of using the schemes are incorrect and that is not unlikely that HMRC will also move to tighten regulation of QNUPS following its intervention in the QROPS market.
In a correspondence to advisers, Codrington said: “Much has been written about the tax benefits of QNUPS, and a lot of it is, to put it mildly, ambitious.
“A QNUPS is a pension scheme, and it must be demonstrated that it has been set up with pension provision in mind. If not, then it would suggest to HMRC that avoidance of taxation was the purpose.”
Codrington added that where it seems avoidance of tax was the main purpose for using a QNUPS, HMRC may use any number of statutes to bring a taxable charge against a member. Codrington added that this would also include, in his opinion, the avoidance of inheritance tax.
As well as tax, Codrington said the use of a certain asset classes or making large contributions may also draw the eye of HMRC and warns that “these activities should be avoided at all costs”.
