Transfers: Scheme administrator actions when transferring to a QROPS
Scheme administrator requirements before making the transfer
The section ‘Information the member has to provide before the transfer takes place’ at PTM102000 sets out the details members should pass to the scheme administrator before the transfer is made. The scheme administrator should tell the member about these requirements within 30 days of the member’s transfer request.
Before making a transfer to a qualifying recognised overseas pension scheme (QROPS), the scheme administrator should have carried out reasonable checks in relation to the transfer as part of their due diligence. There is no checklist of these requirements as each case will depend on the circumstances. However HMRC would expect due diligence checks to include amongst other things:
- ensuring the member has provided the prescribed required information and written acknowledgement - see PTM102000 ‘Information the member has to provide before the transfer takes place’ above, and
- no more than one day before making the transfer, checking the published list of schemes that have notified that their scheme meet the conditions to be a recognised overseas pension scheme. Scheme administrators should ensure that the scheme details provided to them with the transfer request match the details on the published list. PTM112400 explains how this published list works and why a scheme may not be included in the published list. The scheme administrator should keep a printout of the page from the published list from the day before the transfer (and also retain a copy of the QROPS reference letter if this has also been obtained)
If after making the transfer it transpires that the transfer was not a recognised transfer the transfer will be an unauthorised payment and the scheme administrator liable to the scheme sanction charge - see PTM135000. The scheme administrator may apply to HMRC for discharge of the scheme sanction charge if both the following conditions are met:
- the scheme administrator reasonably believed that the unauthorised payment was not a scheme chargeable payment, and
- in all the circumstances of the case, it would not be just and reasonable for the scheme administrator to be liable to the scheme sanction charge in respect of the unauthorised payment.
PTM135400 explains the circumstances in which a scheme administrator may apply for discharge from the scheme sanction charge and when HMRC may consider such a discharge.
In this respect the scheme administrator will need to persuade HMRC that they carried out sufficient due diligence checks, including checking the published list, before making the transfer.
As the transfer to a QROPS is a BCE 8 the scheme administrator needs to establish whether or not a lifetime allowance charge arises as a result of the transfer. The scheme administrator may ask the member for more information to work out if tax is due and how much. Any lifetime allowance charge due is normally deducted from the amount of the transfer (as the scheme administrator is jointly and severally liable with the member to the tax charge).
Scheme administrator requirements after the transfer - APSS 262
Regulation 3 The Registered Pension Schemes (Provision of Information) Regulations 2006 - SI 2006/567
The scheme administrator must report the transfer to HMRC within 60 days of the transfer. The transfer must be reported using form APSS 262.
The APSS 262 should be signed by the scheme administrator, but where this causes an administrative burden (for example 50 forms are being submitted at the same time), a covering letter can instead accompany the forms. This covering letter will need to be signed by the scheme administrator and must list the names of those members the forms and transfers relate to.
If the APSS 262 isn’t delivered on time, or the information provided is not correct, the scheme administrator may be liable to penalties under section 98 Taxes Management Act 1970 - see PTM160800.
The APSS 262 requires the scheme administrator to confirm that they have checked the information and prescribed acknowledgement provided by the transferring member (see ‘Information the member has to provide before the transfer takes place’ at PTM102000). The APSS 262 also requires the scheme administrator to give HMRC the following information:
About the member
- Name and date of birth;
- Principal residential address and, if that address is not in the United Kingdom, the member’s last principal residential address in the UK;
- National Insurance number or, where applicable, written confirmation that the member does not qualify for a National Insurance number;
- The telephone number, if any, which the member provided for use by the scheme administrator or HMRC in relation to the scheme;
- If the member is no longer UK resident, the date they ceased to be resident in the UK (not required if the transfer was requested before 12 August 2013).
About the transfer
- The date of the transfer;
- The amount of the transfer;
- A description and valuation of each type of assets transferred including a valuation of any unquoted shares, quoted shares and real property.
About the QROPS
- The name and address of the QROPS to which the transfer has been made;
- The country or territory under the law of which the QROPS is established and regulated;
- The QROPS scheme manager’s name, address, business telephone number and, where available, email address;
- The QROPS reference number allocated by HMRC when it acknowledged the scheme manager’s notification that the scheme meets the conditions to be a recognised overseas pension scheme.
Other scheme administrator requirements after the transfer
Member has flexibly accessed their pension rights
Regulations 14ZC The Registered Pension Schemes (Provision of Information) Regulations 2006 - SI 2006/567
If the scheme administrator has reason to believe that the member has flexibly accessed their pension rights before the transfer they must tell the QROPS scheme manager about this. PTM166700 provides guidance about this requirement.
PTM056520 provides guidance about when a member flexibly accesses their pension rights. Even if the transfer is made up of uncrystallised rights a scheme administrator may have reason to believe that the member has flexibly accessed their pension rights.
Information about the lifetime allowance
Regulations 12 and 14 The Registered Pension Schemes (Provision of Information) Regulations 2006 - SI 2006/567
As the transfer is a benefit crystallisation event the scheme administrator must give the member a BCE statement in accordance with guidance at PTM164400.
If a lifetime allowance charge arises as a result of the transfer the scheme administrator must