If you get a QROPS, what probably attracted your attention to the idea of getting one was the chance to pay no tax to the UK Treasury. After a working lifetime of losing a substantial proportion of your pay packet to them every month, it must be satisfying to transfer and withdraw your pension beyond their radar.
However, getting a QROPS does not mean that you escape HMRC’s notice completely. After all, for the first 5 years following the transfer, your QROPS administrators will have to report back on what goes on with the scheme. When those 5 years have elapsed, HMRC has no right to be notified of any gains or losses your pension scheme makes.
A Qualifying Recognised Overseas Pension Scheme is only capable of attracting the tax exemption if it has been approved by HMRC themselves. This means that HMRC will have examined the plans and proposals of the QROPS provider and deemed that it is taxed and regulated as a pension in its own country.
This “approval” does not mean that HMRC recommend any particular product, or indeed that they endorse that it would be a good idea to transfer your UK pension to it. QROPS are typically mentioned on a list that is kept on the HMRC website. Some confidential ones are available, but these are typically not open to members of the general public.
If your QROPS should for some reason fall foul of the QROPS rules (e.g. by misinterpreting them in some way), the QROPS may lose its HMRC approval. In this case, the UK tax exemption may be at risk, and advice from a specialist QROPS adviser needs to be sought as soon as possible.
When you get your QROPS, your QROPS adviser should tell you all about the potential tax liabilities is brings. Accordingly, you may have to fill in returns in the country in which the QROPS is based and the country in which you live, if different.
