However, in a note released last week the Revenue did not confirm whether unauthorised transfers will also be subject to an unauthorised payment charge, which several senior industry figures have said will be the case.
As was widely assumed, the note said that if a Qualifying Recognised Overseas Pension Scheme does not meet the conditions for the “pensions age test” – which only allows benefits to be paid out before the age of 55 in cases of ill-health – then it will no longer be treated as a QROPS.
The clarification follows the Revenue’s suspension of the recognised overseas pension schemes (ROPS) list last Wednesday for “reformatting” until 1 July.
“If a scheme does not meet the requirements to be a ROPS then it is not a QROPS, even if it previously appeared on the ROPS notifications list,” it said.
“If a scheme is not a QROPS then a transfer to that scheme will not be tax-free. You will need to satisfy yourself that the scheme you are transferring your scheme to is a QROPS.
“As part of your checks you should always confirm with the scheme manager of the scheme to which you want to transfer whether that scheme meets all of the requirements to be a ROPS,” said HMRC.
Clarity
It also confirmed that transfers made before 6 April into schemes that are no longer QROPS will remain subject to UK tax on the same basis as if the scheme had remained a QROPS.
Such policyholders will be able to remain as members and receive a pension paid from the sums transferred without automatically incurring additional UK tax charges.
The Revenue’s assertions confirm suspicions that schemes which did not meet the pensions age test in time will not feature on the reformatted list.
HMRC sent a letter on 17 April to all scheme operators asking them to confirm that they meet the requirements to be a QROPS.
