Frequently Asked Questions

General
• I have taken all my main scheme benefits before A-day
including a tax-free lump sum retirement benefit and deferred
my AVC’s. Can I take another lump sum after A-day?
• For a short service refund lump sum, what happens when
there are protected rights?
• I’m an IFA with a particular client/s in mind. Can the Helpline
tell me the best way forward for my client/s?
• I’m self-employed and never know the amount of my income
until after the end of the tax year. Can I maximise pension
contributions using carry-back under pensions simplification?
If not why not?
• If I pay more than my earnings into my scheme can I get my
excess contributions back?
• When will I be able to apply for Primary or Enhanced
Protection?
• Are HMRC going to provide model rules?
• I have an approved scheme, how do I get my Pension Scheme
Tax Reference?
• We are a large company with many different clients, will we
need or can we have more than one Practitioner ID?
• A SIPP had acquired a property - for example "off-plan" - with
the intention of holding it as an investment. As a result of the
latest PBR announcements, the decision was taken to dispose
of that property. Would HMRC regard such a disposal as
"trading"?
International
• When will the application forms for QROPS notifications be
available?
• Has HMRC already developed a checklist and process for
overseas scheme administrators to apply for QROPS status?
• What action will APSS take on receipt of a QROPS notification?
• How long will it take to process a QROPS application?
• Will there be grandfathering provisions for people to complete
transfers after 6th April before the new regime starts, or is the
6th April cut off to hold in all cases?
• What would the position be if a cheque was received by the
QROPS scheme manager on or after 6 April 2006 but before
the overseas scheme received its QROPS status?
• Will any of the criteria set out in Appendix VI of IR 12 and
Appendix 22 of IR 76 still apply in the post A-Day regime?
• What requirements must be met from A-Day in respect of
overseas transfers given that the current requirements will
become obsolete?
• Once a scheme is accepted as a QROPS will that be held
centrally for UK providers to look and check that for example
the New Zealand scheme has QROPS status - i.e. will it be
held on an HMRC Website?
• Can you confirm the implications when a QROPS ceases to
have QROPS status but still holds a UK pension benefit for a
member
• What checks will a UK Scheme Administrator have to make to
ensure that the transfer is an “authorised transfer” to a
QROPS?
• What is the position regarding overseas transfers in respect of
contracted-out rights post A-Day?
• For those with total balances from all funds of less than
£5,000 at Year End, can the QROPS regulations be relaxed.
This amount to be related to a UK cost of living index?
• Is there any special requirement for an Australian Super Fund
to become a QROPS?
• As a complying regulated Superannuation fund satisfies the
requirements of an "overseas pension scheme" if its primary
purpose is to pay pensions and as there exists a Double
Taxation Agreement that contains exchange of information and
non-discrimination provisions between Australia and United
Kingdom, Article 23 and 27 of the 2003 UK Convention refers,
would a transfer to such a fund qualify as a recognised
transfer?
• Is it correct that a SMF cannot be granted QROPS status as it
is not open to the public and so doesn’t meet Primary
Condition 1 of The Pension Schemes (Categories of Country
and Requirements for Overseas Pension Schemes and
Recognised Overseas Pension Schemes) Regulations 2006 (SI
2006/206)?
• Will it be possible to transfer a UK pension to Australia, where
benefits are either providing unsecured Pension benefits or
alternatively secured pension benefits (i.e. UK pension is in
draw down). We note that UK pension annuity transfers would
not be authorised outside EEA.
• What reporting requirements will HMRC impose on overseas
providers?
• Is there an amount that a client can withdraw which will not be
subject to reporting to HMRC?
• Is there a form for QROPS reporting?
• Can you confirm that QROPS reporting ceases after a UK
individual has been absent from the UK for more than 5 full
years?
• If the payment includes transferring funds to another
Australian Super Fund, do we have to confirm that the
receiving fund is also a QROPS?
• One of the requirements is for the Australian Super Fund to
advise HMRC when the fund makes “a payment” to the
member that transferred their UK pension into the Australian
Super Fund. “A payment” includes the commencement of
pension payments, a cash withdrawal or transferring the funds
to another Australian Super Fund. How does HMRC envisage
that this reporting is to be done (eg on-line system, hard copy
forms etc)?
• Is it correct to say UK money is deemed to be the first amount
on a report from the QROPS to HMRC in order to extinguish
any tax liability at its earliest? For example, a client has $100
in his Australian QROPS fund, made up of $100 resultant from
a UK transfer and $100 resultant from an Australian
contribution. He then transfers half of it (or $100) to a non-
QROPS - is it deemed that this amount was all UK money on
the report?
• If a transfer is made from a registered pension scheme to a
non QROPS is it treated as an unauthorised payment
irrespective of how long the member has been non-UK
resident?
• What is the timeline for access to funds once transferred
where a potential penalty will not apply?
• If a transfer was originally received by a QROPS and then
subsequently transferred to a non-QROPS, what are the
taxation implications ? Does the period that the member has
been not resident in the UK have any impact?
• If a member draws benefits in Australia within first 5 years but
draws 25% as Cash, with remaining fund invested but income
withdrawals made in line with Australian rules, the rules state
there would be no charge. If the member waits until after 5
years, would he be entitled to withdraw remaining fund with
no charge as outside the 5-year rule?
• What penalty/tax charge will be imposed for those taking
withdrawals in the penalty period?
• How will the client pay that 'penalty'?
• How do payments by QROPS affect the client’s tax liability in
the UK?
• How will the HMRC determine what portion of this payment
relates to the UK transfer (eg client withdrawals $1,000 cash
from a $500,000 super account that consists of a UK pension
transfer of $100,000)?
• What are the tax implications, if any, when a member dies
within the first 5 years of being resident in Australia Could you
confirm whether this tax charge (if any) would apply when
retirement benefits are not in payment and when they are in
payment in Australia (i.e. pre & post retirement). Will the
QROPS need to confirm such an event to HMRC?
• On transferred funds what is the upper age for immediate
access - are we right in believing it to be 55 or is there a
phased period from 50 currently to 55 in 2010? How will the
changing ages of retirement affect transfers for someone who
has transferred funds?
• Under RPSM14101060 and RPSM14101070, there are a few
references to RPSM131xxxxx – has this been updated yet for
completeness?
• Will HMRC issue any guidance documentation to Overseas
Advisors or QROPS administrators?
• We are aware that there has been several re-writes in respect
of elements of the overseas transfer guidance in Chapters 13
& 14 of RPSM. Can you tell us what the current position is
please?
• Will HMRC issue guidelines on how a QROPS should maintain
itself to remain a QROPS?
• With other A-Day changes significant knowledge, experience
and wisdom will be required and a UK advisory licence. Will
HMRC run any training programmes or allow the private sector
to provide this service?
• Will HMRC maintain a list of offending advisors?
• What process will exist to publicise “offenders”?
• Is it the intention of HMRC to tighten up the advice process in
order that transfers that should take place do take place and
those that should not, do not?
• Would HMRC welcome a standard advice process to ensure
their compliance programme is efficient and successful?
• Will HMRC consult with the ATO and IRNZ as regards its
compliance programme?
• Clearly significant tax-planning opportunities will allow greater
 tax reliefs via the UK post A-Day regime. Are we correct in
assuming that this is part of the reason for new compliance
processes?
• How do HMRC wish to be advised of compliance breaches Post
A-Day as regards QROP delinquency?
• How does someone who is an overseas resident confirm their
LTA?
• What are the IHT implications for an overseas transfer to a
QROPS assuming a member remains UK domicile?
General
Q. I have taken all my main scheme benefits before A-
day including a tax-free lump sum retirement benefit
and deferred my AVC’s. Can I take another lump sum
after A-day?

A. If no benefits have been drawn under the AVC arrangement

prior to A-day, when they are taken on or after A Day a tax
-free pension commencement lump sum may be taken subject
to the rules of that arrangement.

Q. For a short service refund lump sum, what happens

when there are protected rights?

A. To qualify for a short service refund lump sum you must

extinguish all rights to benefits under that scheme, see RPSM
09104720.

Q. I’m an IFA with a particular client/s in mind. Can the

Helpline tell me the best way forward for my client/s?

A. HMRC cannot give tax planning advice, the tax

consequences of any actions relating to registered pension
schemes are set out in the legislation and the Registered
Pension Schemes Manual.

Q. I’m self-employed and never know the amount of my

income until after the end of the tax year. Can I
maximise pension contributions using carry-back under
pensions simplification? If not why not?

A. There is no carry-back for contributions paid from 6th April

2006. After this date you will be able to contribute what you
want, when you want to a registered pension scheme and get
tax relief on those contributions up to 100% of your relevant
earnings. If you have no earnings in a year, or earnings are
less than £3,600, you will be able to pay contributions with
relief up to that amount.If you do not know what your income
will be in a tax year, pension contributions can be paid in
based on estimated earnings. With the maximum fixed at
100% most can contribute as much as they wish and get tax
relief without needing to first establish exact earnings
amounts.

Q. If I pay more than my earnings into my scheme can I

get my excess contributions back?

A. If in any tax year an overpayment is made that is in excess

of the 100%/£3600 limit there is a facility for the excess to be
repayable to the member at any time during the following six
years with the scheme's agreement. Regardless of whether
you intend to reclaim the excess you must tell the scheme
administrator whenever you become aware that a claim for
relief at source has to be adjusted because there is now
established to be an excess contribution.

Q. When will I be able to apply for Primary or Enhanced

Protection?

A. You have three years from 6th April 06 to notify HMRC that
you wish to register your entitlement for Primary or Enhanced
Protection. You cannot do this before this date as your
notification must include a valuation of your pension fund at
5th April 06. Here is a link to the Protection forms and
completion notes
Q. Are HMRC going to provide model rules?

A. No. From A-day HMRC will not be issuing model rules as it

does now. It will be up to schemes to design their own rules.

Q. I have an approved scheme, how do I get my

Pension Scheme Tax Reference?

A. See Newsletter No 8 article 3 b for full details

Q. We are a large company with many different clients,

will we need or can we have more than one Practitioner
ID?

A. You may pre-register for Pension Schemes Online as many

times as you wish if it helps to have more than one
Practitioner. If a Scheme Administrator has authorised HMRC
to deal with more than one practitioner, then we will contact
the first named practitioner as it will not be possible through
the authorisation process to say who is dealing with what.
Therefore some practitioners might want to consider applying
for a practitioner ID for each function they are likely to have
responsibility for so that it is possible to identify from the ID
used who we should contact on particular matters.

For example, J Bloggs Pensions Ltd are practitioners to a

number of schemes and have pre-registered for Pension
Schemes Online and received a Practitioner ID. But they also
act as practitioner to a number of schemes in relation to the
Event Report only. They could pre-register for Pension
Schemes Online to obtain a Practitioner ID in the name of "J
Bloggs Pensions Ltd – Event Reports" and give this ID to the
Scheme Administrators to use when they complete the
authorisation process. HMRC will then communicate with the
Practitioner linked to that ID if they have a query about the
Event Report.

Q A SIPP had acquired a property - for example "off-

plan" - with the intention of holding it as an
investment. As a result of the latest PBR
announcements, the decision was taken to dispose of
that property. Would HMRC regard such a disposal as
"trading"?

A Each situation must of course be decided on its own

particular facts and general guidance regarding the approach
to be taken in determining whether a transaction is to be
regarded as trading or investment can be found at BIM 60000
- 60500

But if the asset was acquired with the intention to hold as an

investment (BIM 60030) and was disposed of following the
PBR announcement, unless there has been a change of
intention (of the type discussed in BIM 60060) normally
resulting in some form of physical change to the asset, this
transaction is unlikely to be regarded as a trading one.

In the case of "off plan", the fact that it was in the process of
being developed at the time of the PBR, in accordance with
the contract originally entered into between the developer and
the SIPP, would not make it a trading transaction for the SIPP
where the development continues.
It should be remembered however, that the Technical note
issued at the time of the PBR made it clear that : "If
investment was made before midnight on PBR day and the
offplan investment does not become residential property after
PBR day, it will be protected."

International
Pensions Simplification - Overseas Transfers
from A-Day
QROPS Notifications
Q. When will the application forms for QROPS
notifications be available?

A. The form APSS 251 that can be used by a scheme manager

to give Audit and Pension Schemes Services (APSS) a QROPS
notification is available here and the notes to help you
complete the form are here

Q. Has HMRC already developed a checklist and process

for overseas scheme administrators to apply for QROPS
status?

A. A scheme manager can obtain QROPS status by sending

form APSS 251 to APSS. The form is designed to make the
scheme manager go through the requirements that have to be
met when filling it in.

Q. What action will APSS take on receipt of a QROPS

notification?

A. In response to a QROPS notification APSS will send the

scheme manager a letter of acceptance that the scheme is a
QROPS. The letter will show the unique QROPS reference
number for that scheme. Details of the QROPS will be entered
on the APSS database. APSS can ask the scheme manager for
more evidence before issuing a letter of acceptance (or
rejection).

Q. How long will it take to process a QROPS

application?

A. We aim to turnaround 91% of all scheme registrations

within 15 working days and the remainder within a further 25
working days. However we may have to amend these timings
if volumes of all new forms coming into APSS post A-Day are
greater than we expect.
Pipeline Cases
Q. Will there be grandfathering provisions for people to
complete transfers after 6th April before the new
regime starts, or is the 6th April cut off to hold in all
cases?

A. All transfers made after 5 April 2006 will be subject to the

new regime rules and tax charges.

Q. What would the position be if a cheque was received

by the QROPS scheme manager on or after 6 April 2006
but before the overseas scheme received its QROPS
status?A. A UK scheme should not issue a cheque after 5
April 2006 until it is satisfied that the overseas scheme to
which a member wants to transfer his/her rights has
submitted a QROPS notification to HMRC and that it has been
accepted. If the overseas scheme has not been accepted as a
QROPS at the time the transfer is made, then there would be
an unauthorised payments charge (and surcharge) on the
individual and a scheme sanction charge on the UK scheme

A UK scheme administrator may therefore take the precaution

of asking the overseas scheme manager for a copy of its APSS
acceptance letter before issuing a cheque. A UK scheme
administrator will also be able to write to APSS to check
whether or not a scheme is on its QROPS database.
Overseas Transfer Requirements
Q. Will any of the criteria set out in Appendix VI of IR
12 and Appendix 22 of IR 76 still apply in the post A-
Day regime?

A. No. PN Appendix VI and Appendix 22 of IR76 will not apply

to transfers made after 5 April 2006 so those requirements
will no longer be relevant.

Q. What requirements must be met from A-Day in

respect of overseas transfers given that the current
requirements will become obsolete?

A. A transfer to an overseas scheme will be a "recognised

transfer", and therefore not give rise to an unauthorised
payments charge, if the scheme is a QROPS. The
requirements to be met for a scheme to be a QROPS are
provided for in section 169 of the Finance Act 2004 and in
Statutory Instruments 2006/206 and 2006/208. There is
guidance on those requirements in Chapter 14 of the
Registered Pension Schemes Manual (RPSM) which can be
found on the HMRC Website.

Q. Once a scheme is accepted as a QROPS will that be

held centrally for UK providers to look and check that
for example the New Zealand scheme has QROPS status
- i.e. will it be held on an HMRC Website?

A. APSS will have a QROPS database. This will not be put on

the HMRC Website, but UK scheme administrators and
members considering a transfer to an overseas scheme will be
able to write to APSS to check whether or not the scheme is
on the QROPS database.

Q. Can you confirm the implications when a QROPS

ceases to have QROPS status but still holds a UK
pension benefit for a member

A. The scheme would lose its right to receive further transfers

from UK registered pension schemes.

Q. What checks will a UK Scheme Administrator have to

make to ensure that the transfer is an “authorised
transfer” to a QROPS?
A. A UK Scheme Administrator will need to be satisfied that an
overseas transfer is to be made to a QROPS. The Scheme
Administrator can check with APSS that the scheme is on the
QROPS database.

Q. What is the position regarding overseas transfers in

respect of contracted-out rights post A-Day?

A. Transfers to overseas pension schemes of protected rights

and of a Guaranteed Minimum Pension will be subject to the
same HMRC requirements as overseas transfers of other
pension rights. But transfers of such rights will also have to
meet DWP requirements, and those concerned will need to
check with DWP.

Q. For those with total balances from all funds of less

than £5,000 at Year End, can the QROPS regulations be
relaxed. This amount to be related to a UK cost of living
index?

A. Section 169 of FA 2004 and the associated regulations

apply to all transfers to a QROPS. There is no discretion
allowed.

Q. Is there any special requirement for an Australian

Super Fund to become a QROPS?

A. No.

Q. As a complying regulated Superannuation fund

satisfies the requirements of an "overseas pension
scheme" if its primary purpose is to pay pensions and
as there exists a Double Taxation Agreement that
contains exchange of information and non-
discrimination provisions between Australia and United
Kingdom, Article 23 and 27 of the 2003 UK Convention
refers, would a transfer to such a fund qualify as a
recognised transfer?

A. Yes, if the other QROPS requirements are met. The onus is

on a scheme manager to satisfy himself that primary condition
2 in SI 2006/206 is met, but it is our understanding that an
Australian complying regulated Superannuation fund will meet
this condition. Australia does come within regulation 3(2)(c) in
SI 2006/206.
Australian Self Managed Funds (similar to SSAS and
SIPP)
Q. Is it correct that a SMF cannot be granted QROPS
status as it is not open to the public and so doesn’t
meet Primary Condition 1 of The Pension Schemes
(Categories of Country and Requirements for Overseas
Pension Schemes and Recognised Overseas Pension
Schemes) Regulations 2006 (SI 2006/206)?

A. No, that would not prevent a SMF being a QROPS. Primary

condition 1 will be met by a SMF provided it is open to
residents of Australia i.e. it is not exclusively for non-
residents.
Transfer of benefits in payment
Q. Will it be possibleto transfer a UK pension to
Australia, where benefits are either providing
unsecured Pension benefits or alternatively secured
pension benefits (i.e. UK pension is in draw down). We
note that UK pension annuity transfers would not be
authorised outside EEA.

A. Yes, this would be a recognised transfer under section 169.

But once the unsecured pension (UP) fund or alternatively
secured pension (ASP) fund is transferred it will need to stay
within the authorised payment rules. So they will need to stay
within the FA 2004 maximum withdrawal limits and basis
periods for USP/ASP funds. The regulations (SI 0499 of 2006)
dealing with treatment of transfers of pensions in payment,
including transfers of UP/ASP funds will also apply. The sums
and assets transferred are treated as remaining under the
same arrangement for UK tax purposes.

Where an individual is in receipt of an annuity, pension rule 4

in s165, paragraph 3(1) of schedule 28 and s275 mean that
the annuity can only be transferred to an EEA insurance
company. SI0499 of 2006 also covers transfers of lifetime
annuities. Where a lifetime annuity is payable following the
transfer it is treated as the same lifetime annuity for tax
purposes.
Reporting by QROPS
Q. What reporting requirements will HMRC impose on
overseas providers?

A. The requirements are specified in SI 2006/208. In order for

an overseas scheme to be a QROPS the manager must have
undertaken that on the making of a payment (or of a deemed
payment) he/she will provide HMRC with the name and
address of the member, and the date, amount and nature of
the payment.

Q. Is there an amount that a client can withdraw which

will not be subject to reporting to HMRC?

A. No.

Q. Is there a form for QROPS reporting ?

A. Yes, the form APSS 253 will be available later in the year
on the HMRC Website . The Event Report (APSS 300) is not
relevant for QROPS – it is a form for UK registered pension
schemes. The information reporting requirements for
registered pension schemes and for QROPS are different.

Q. Can you confirm that QROPS reporting ceases after a

UK individual has been absent from the UK for more
than 5 full years?

A. Under regulation 3(3) of SI 2006/208 a QROPS will not

have to report to HMRC a payment (or a deemed payment) if
the member is not tax resident in the UK when the payment is
made and has neither been UK resident in that tax year nor in
any of the previous five tax years. But a QROPS will need to
check on the position when a payment is made as the
member could have become UK resident again after a period
of non-residence.

Q. If the payment includes transferring funds to

another Australian Super Fund, do we have to confirm
that the receiving fund is also a QROPS?

A. No, but it would be surprising if the QROPS did not check

that the receiving fund is a QROPS in order to know if the
transfer would give rise to an unauthorised payments
charge/surcharge on the individual.

Q. One of the requirements is for the Australian Super

Fund to advise HMRC when the fund makes “a
payment” to the member that transferred their UK
pension into the Australian Super Fund. “A payment”
includes the commencement of pension payments, a
cash withdrawal or transferring the funds to another
Australian Super Fund. How does HMRC envisage that
this reporting is to be done (eg on-line system, hard
copy forms etc)?

A. Form APSS 253 can be used to send reports of payments to

APSS. It will not be possible to submit reports electronically.
Taxation Implications of Payments by a QROPS
Q. Is it correct to say UK money is deemed to be the
first amount on a report from the QROPS to HMRC in
order to extinguish any tax liability at its earliest? For
example, a client has $ 200 in his Australian QROPS
fund, made up of $100 resultant from a UK transfer and
$ 100 resultant from an Australian contribution. He
then transfers half of it (or $100) to a non-QROPS - is it
deemed that this amount was all UK money on the
report?A. Yes.

Q. If a transfer is made from a registered pension

scheme to a non QROPS is it treated as an unauthorised
payment irrespective of how long the member has been
non-UK resident?

A. Yes. An unauthorised payments charge would arise on the

member and a scheme sanction charge would arise on the UK
scheme if a transfer were made from a UK registered pension
scheme to a non-QROPS whenever it was made. There would
not be a charge on the overseas pension scheme.

Q. What is the timeline for access to funds once

transferred where a potential penalty will not apply?

A. An individual whose UK tax-relieved rights have been

transferred to a QROPS could be liable to an unauthorised
payments charge unless when a payment is made to or in
respect of the individual by the QROPS he/she is not resident
for tax purposes in the UK and has neither been UK resident
in that UK tax year nor in any of the previous five tax years.

Q. If a transfer was originally received by a QROPS and

then subsequently transferred to a non-QROPS, what
are the taxation implications ? Does the period that the
member has been not resident in the UK have any
impact?
A. The individual would be liable to an unauthorised payments
charge unless when the subsequent transfer was made he/she
was not resident for tax purposes in the UK and had neither
been UK resident in that UK tax year nor in any of the
previous five tax years.

Q. If a member draws benefits in Australia within first 5

years but draws 25% as Cash, with remaining fund
invested but income withdrawals made in line with
Australian rules, the rules state there would be no
charge. If the member waits until after 5 years, would
he be entitled to withdraw remaining fund with no
charge as outside the 5-year rule?

A. If the 25% cash payment meets the conditions of being a

pension commencement lump sum under schedule 29 to FA
2004 - one of which is that the member becomes entitled to it
in connection with the member becoming entitled to a
relevant pension - then it will not give rise to an unauthorised
payments charge. If a subsequent cash payment is made
when the member is not tax resident in the UK and has
neither been UK resident in that UK tax year nor in any of the
previous five tax years then it will not give rise to an
unauthorised payments charge. And as before in the first 5/6
year period income withdrawals will also have to meet FA
2004 rules.

Q. What penalty/tax charge will be imposed for those

taking withdrawals in the penalty period?

A. If an unauthorised payment is made then that will give rise

to a 40% unauthorised payments charge and, possibly, to a
15% unauthorised payments surcharge.

Q. How will the client pay that 'penalty'?

A. By declaring the unauthorised payment, or other payment

giving rise to a charge under schedule 34 to FA 2004, on a
self-assessment return. That should be sent to the tax office
that is dealing with their affairs or that was dealing with their
affairs immediately before they left the UK.

Q. How do payments by QROPS affect the client’s tax

liability in the UK?

A. A payment could give rise to a member payment charge

under schedule 34 to FA 2004. In particular, the individual will
be liable to an unauthorised payments charge if the payment
would have been unauthorised had it been made from a UK
registered pension scheme.

Q. How will the HMRC determine what portion of this

payment relates to the UK transfer (eg client
withdrawals $1,000 cash from a $500,000 super
account that consists of a UK pension transfer of
$100,000)?

A. Under schedule 34 to FA 2004 and SI 2006/207 a payment

from a QROPS will be treated as coming first from the
individual's UK tax-relieved fund (if any) and next from the
individual's relevant transfer fund. So in the example the cash
withdrawal will be treated as coming from the fund transferred
from a UK scheme. There is guidance on the attribution of
payments at RPSM13102190.

Q. What are the tax implications, if any, when a

member dies within the first 5 years of being resident
in Australia Could you confirm whether this tax charge
(if any) would apply when retirement benefits are not
in payment and when they are in payment in Australia
(i.e. pre & post retirement). Will the QROPS need to
confirm such an event to HMRC?

A. The QROPS will need to report any death benefit payments

in respect of the deceased member. If the payments conform
with the FA 2004 pension death benefit/lump sum death
benefit rules there will be no unauthorised payments charge
(surcharge); otherwise there will be.

Q. On transferred funds what is the upper age for

immediate access - are we right in believing it to be 55
or is there a phased period from 50 currently to 55 in
2010? How will the changing ages of retirement affect
transfers for someone who has transferred funds?

A. Generally, someone who has transferred their rights to an

overseas scheme will have to take their benefits no earlier
than the normal minimum pension age - age 50 up to 6 April
2010 and age 55 after that date - or they will be liable to an
unauthorised payments charge. However, if the individual had
a right under their UK scheme's rules on 10 December 2003
to a lower normal retirement age and their rights were
transferred to a QROPS as part of a "block transfer" then they
will be able to take benefits at that age without incurring such
a charge. A "block transfer" is defined in the RPSM Glossary.
Guidance
Q. Under RPSM14101060 and RPSM14101070, there are
a few references to RPSM131xxxxx – has this been
updated yet for completeness?

A. Yes.

Q. Will HMRC issue any guidance documentation to

Overseas Advisors or QROPS administrators?

A. There is general technical guidance in the RPSM. No special

guidance for advisers is planned.

Q. We are aware that there has been several re-writes

in respect of elements of the overseas transfer
guidance in Chapters 13 & 14 of RPSM. Can you tell us
what the current position is please?A. Chapters 13 and 14
of RPSM have been updated to take into account drafting
changes to the regulations which became SI2006/206 and SI
2006/208. The revised guidance is available in pdf format on
HMRC’s Website. It may be updated again, for example in
response to further questions for clarification.

Q. Will HMRC issue guidelines on how a QROPS should

maintain itself to remain a QROPS?

A. No. The requirement that a scheme has to meet to be a

QROPS are specified in section 169 of FA2004 and in SIs
2006/206 and 2006/208, and there is guidance on them in
Chapter 14 of RPSM. In order to be a QROPS a scheme’s
manager has to undertake to inform HMRC if it ceases to be a
“recognised overseas pension scheme.

Q. With other A-Day changes significant knowledge,

experience and wisdom will be required and a UK
advisory licence. Will HMRC run any training
programmes or allow the private sector to provide this
service?

A. HMRC is not intending to run any training programme on

overseas transfers.
Compliance Issues
Q. Will HMRC maintain a list of offending advisors?

A. We have no plans to do this.

Q. What process will exist to publicise “offenders”?

A. A scheme that is excluded from being a QROPS will be

removed from the QROPS database.

Q. Is it the intention of HMRC to tighten up the advice

process in order that transfers that should take place
do take place and those that should not, do not?

A. A transfer to an overseas scheme that is not a QROPS will

give rise to charges on the UK scheme member and
administrator. That should mean that UK schemes do not
make such transfers.
Q. Would HMRC welcome a standard advice process to
ensure their compliance programme is efficient and
successful?

A. APSS has issued guidance on overseas transfers in Chapter

14 of RPSM. We will consider expanding that guidance in the
light of the enquiries and comments that are received.

Q. Will HMRC consult with the ATO and IRNZ as regards

its compliance programme?

A. APSS will consult as widely as necessary for compliance

purposes. If it has reason to think that the overseas transfer
rules are being abused then it will use any available
information source, including the exchange of information
provisions in our Double Taxation Agreements with Australia
and New Zealand.

Q. Clearly significant tax-planning opportunities will

allow greater tax reliefs via the UK post A-Day regime.
Are we correct in assuming that this is part of the
reason for new compliance processes?

A. Under the new regime there will be fewer restrictions on

the tax-free build-up of rights under a UK registered pension
scheme but scheme payments will be subject to new charges
intended to recoup excess relief and to prevent payments
being made in an unauthorised way. To deter abuse transfers
to overseas schemes will be taxed as unauthorised payments
unless they are made to a QROPS. Transfers to a QROPS will
be potentially liable to a LTA charge, and a subsequent
unauthorised payment from a QROPS will give rise to a charge
on the same basis as if it had been made from a registered
pension scheme. If a QROPS fails to comply with the reporting
requirements HMRC can exclude it from being a QROPS.

Q. How do HMRC wish to be advised of compliance

breaches Post A-Day as regards QROP delinquency?

A. APSS's Compliance Section will be prepared to consider any

information provided about non-compliance with the overseas
transfer requirements. This can be given over the phone or in
writing - the latter is more useful, and it is helpful to receive
as much evidence and detail as possible.
QROPS & Lifetime Allowance (LTA)
Q. How does someone who is an overseas resident
confirm their LTA?

A. A transfer to a QROPS will be a benefit crystallisation event

under section 216 FA 2004 and will give rise to a lifetime
allowance charge if the amount transferred exceeds the
individual's unused lifetime allowance (LTA). The LTA to which
everyone is entitled is £1.5 million in 2006/07 and will rise to
£1.8 million in 2010/11. The figure for subsequent years will
be obtainable from the HMRC Website at that time.

Where an individual has used some of their LTA on a previous

crystallisation of their rights the UK scheme administrator will
at that time have informed them of the percentage of LTA that
they have used up. Where an individual has in certain
circumstances notified HMRC of their entitlement to an
enhancement of their LTA they will have been informed by
HMRC of the additional percentage of LTA to which they are
entitled.
Inheritance tax Implications
Q. What are the IHT implications for an overseas
transfer to a QROPS assuming a member remains UK
domicile?
A. The transfer would not of itself be a chargeable occasion for
IHT purposes. As a QROPS is not a UK registered pension
scheme the funds in it will be caught by paragraphs 57 and 58
of schedule 36 to FA 2004 (and the transitional relieving
provisions will not apply). If the funds have a UK source they
will be "relevant property" for the purposes of the IHT regime
in Chapter III, Part III IHTA. This means, broadly speaking,
that there will be IHT charges on the current value of the
funds every 10 years and on any payments of capital out of
the scheme. If the UK domiciled individual died whilst entitled
to a pension from the QROPS there could be an IHT charge on
the funds being held in the scheme to produce that pension
income.

For more information, please visit http://www.qropsworld.com