RESIDENTIAL PROPERTY IN QROPS HMRC MANUAL UPDATE

  
 
Two pages of revised guidance have recently been issued by HMRC, they concern the international application of charges to non-UK schemes and the reporting requirements on transfer to a qualifying recognised overseas pension scheme.

Clarification is being sought but the relevance of these changes appears to apply to schemes where members, or those related to the member, directly or indirectly, are able to direct, influence or advise on the manner of investments.

For such QROP schemes dealing with taxable property, the revisions/clarifications are far reaching.

“The taxable property unauthorised payment charge is not a member payment charge under schedule 34. It applies regardless of whether or not a transfer member has been resident for more than five tax years.” HMRC TECHNICAL PAGES RPSM13102180

“A payment to a transfer member has to be notified to HMRC regardless of whether or not they have been non-resident for more than five tax years....”
HMRC TECHNICAL PAGES RPSM14101070

Taxable property consists of residential property and most tangible moveable assets. Residential property can be in the UK or elsewhere.

Unauthorised payment tax charges may arise on the member and scheme sanction charges of 40% apply to income received and gains made from taxable property.

Part of the undertakings completed by a scheme provider in obtaining approval of a QROP scheme is to comply with information requirements, see SI 2006/208.

Whilst it is generally understood that once a member has been non-resident for more than five complete UK tax years the reporting requirement falls away, this “five year rule” is provided for in the Finance Act 2004, schedule 34, para 2.

The new guidance notes highlight the fact that this refers to, inter alia, member payment provisions, but not taxable property unauthorised payment charges.

As it is not a member payment charge, schedule 34 does not apply and thus there is no time limit on the scheme manager to report to HMRC.

Concept Group MD Roger Berry reported “Aurora QROP schemes do not and have not dealt in residential property or any taxable property whatsoever, but do receive transfers and make transfers that may be affected. As Chairman of the local industry QROPS sub-committee we are in communication with HMRC and obtaining definitive guidance on areas of uncertainty in respect of transfers and taxable property issues for members of the industry group.”

18th November 2009
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