HM Revenue & Customs has issued clarification that residential property is not a permitted investment within qualified recognised overseas pension schemes before or after the five-year reporting period.
The note, published online in an HMRC manual last week, states that an unauthorised payment charge is not dependent on how long a member has been non-resident. It says: “It applies regardless of whether or not a transfer member has been non-resident for more than five tax years. Nor is there any time limit on the requirement that the manager of a Qrops reports to HMRC any payments that are referrable to a transfer member’s taxable asset transfer fund.”
Advisers say HMRC’s decision to reiterate this in its legislation is due to misinterpretations by schemes and advisers is a new step. AES International managing director Sam Instone says: “A couple of Guernsey providers have been putting exotic investments into their Qrops, such as residential property, fine wine and antiques, and bending the rules, so HMRC has issued clarification.”
Global Qrops director Paul Davies says: “There was probably a lot of ambiguity about what you could and could not do after the five-year period for investments so HMRC has reconfirmed its position in plain English. Anyone transferring their UK pension across to a Qrops cannot under any circumstances use that money within a Qrops to invest in residential property.”
Global Qrops director Paul Davies stated, “Anyone transferring their UK pension across to a Qrops cannot under any circumstances use that money within a Qrops to invest in residential property.”
Not correct – RPSM13102195 clearly states, “…… made by a relevant non-UK scheme that is an investment–regulated pension scheme”
A QROPS scheme, which is NOT an investment–regulated pension scheme, may invest in residential property.
What is stated above by Emma Rudd is quite correct….. in addition the entire article is simplistic. The new guidance and legislation has nothing to do with what any schemes have actually done.
if the QROPS is “investment regulated” – (meaning the members can direct or influence the investments made by their fund) then the transfer into the QROPS is defined as a “taxable asset transfer fund” (TATF).
Any payment from the TATF is reportable without time limitation. This does not mean a tax charge will arise – that will only be the case if the fund has been used to acquire taxable property.
In reality the provisions are easily avoided – either through a non “investment regulated” scheme (there are no provisions for determining whether or not a scheme is investment regulated) – or by an onward transfer (after 5 tax years of non UK residence) to a “mirror scheme”. That is to a scheme which looks like the original QROPS – but which does not seek QROPS status with HMRC.
Interesting to think a member would not be deemed to influence the investment decision by trustees to use his/her pension to invest in the property in which the member resides.