HMRC Set Up Specialist QROPS Fraud Squad

QROPS Fraud

The Government has set up a specialist fraud unit to monitor transfers into Qualifying Recognized Overseas Pension Schemes (QROPS) due to concerns about fraudulent activity and irresponsible transfers.

HMRC has set up a specialist fraud squad unit to handle QROPS transfers after problens in Singapore and Hong Kong. Currently, New Zealand offers a QROPS scheme which IFA’s are promoting as allowing you access to 100% of your pension as an upfront lump sum payment after 5 years offshore if an expat is over 55. The spirit of a QROPS scheme typically is to allow only a 30% lump sum and the rest of the pension must be used to provide a pension income for life.

An internal ABI pensions note, seen by Money Marketing, revealed that HMRC has established a dedicated team to monitor the activities of QROPS amid concerns over “general abuse” of schemes acting outside the legislation.

The specialist QROPS unit is a sub-division of the Anti-Fraud Unit. An HMRC spokesman says the unit, contained within its pension scheme services department, works closely with officials at the Pensions Regulator and the FSA.

It’s not surprising that HMRC is looking very closely to make sure schemes are used appropriately. I’ve heard stories of IFA’s taking large upfront commissions to cash in a client’s pension, leaving them with nothing to retire on.

Montfort International managing director Geraint Davies says: “A lot of people offering QROPS are bending the rules. There are some innocent advisers in the UK working with QROPS providers in other countries who are not aware what they are up to.”

In April 2008, HMRC deregistered all Singapore-based QROPS, leaving members with a possible 55% unauthorised payment charge on their pension pot.

Last September, HMRC revoked the status of Hong Kong-based Beazley Consulting Pension Scheme as it failed to meet its criteria for QROPS.

I have heard mixed reports on whether the NZ QROPS is under investigation by HMRC. The safest jurisidictions for QROPS transfers are the Isle of Man and Guernsey who have strict compliance to HMRC’s rules. Contact a QROPS specialist to avoid fraud and make sure you don’t get a retrospective tax charge on your pension transfer.

Guernsey and Isle of Man transfers are perfectly allowable and will help shelter your pension from income tax, capital gains tax and inheritance tax. If you have multiple properties in the UK, you can also help to shelter them from inheritance tax through transfers into Qualifying Non-UK Pension Schemes (QNUPS). Contact a QROPS specialist to protect your pension and make sure your transfer complies with HMRC rules and the spirit of the law.

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