International: qualifying recognised overseas pension schemes (QROPS): what makes a scheme a QROPS
What makes a scheme a QROPS
Section 150(1) and (7) to (8) and section 169(2) to (7) Finance Act 2004
The Pension Schemes (Categories of Country and Requirements for Overseas Pension Schemes and Recognised Overseas Pension Schemes) Regulations 2006 - SI 2006/206
In order to be a qualifying recognised overseas pension schemes (QROPS), a scheme must not be a registered pension scheme and must meet four incremental definitions at all times:
- firstly, the scheme must be a pension scheme,
- secondly, the pension scheme must be an overseas pension scheme as set out at PTM112200,
- thirdly, the overseas pension scheme must be a recognised overseas pension scheme (ROPS) as set out at PTM112300, and
- finally, the recognised overseas pension scheme must become a QROPS as defined by the legislation.
With regards to the first bullet above, if the scheme is not designed to provide benefits in respect of one or more of the following: retirement, ill-health, death or similar circumstances, - then it is unlikely to be a pension scheme under the tax law. If the scheme is not a pension scheme as defined, it does not matter if it could potentially meet the conditions in the second and third bullets points, it cannot meet the conditions to be a QROPS.
If a pension scheme fails the conditions to be an overseas pension scheme it is not necessary to see if it meets the ROPS conditions - it is not a QROPS.
If a pension scheme fails the ROPS conditions, it cannot be a QROPS.
ROPS to QROPS
Section 169(2) to (7) Finance Act 2004
In order for a ROPS to be a QROPS, certain steps must be taken and further conditions met.
The scheme manager is the person (or the persons) administering or responsible for the management of the ROPS. The scheme manager of the ROPS must:
- notify HMRC that the scheme is a ROPS providing the following information shown in the section ‘Notifying HMRC that the scheme meets the conditions to be a ROPS’, and
- provide such evidence as HMRC may require to show that the scheme is indeed a ROPS (which may include supplying a copy of the scheme rules).
The scheme manager must also provide certain undertakings and confirmations to HMRC. The scheme manager must undertake:
- to tell HMRC if the scheme ceases to meet the conditions to be a ROPS
- comply with any prescribed information requirements that fall on the scheme manager - see PTM112700 for guidance on these requirements, and
- to operate the overseas transfer charge.
Guidance on the overseas transfer charge starts at PTM102200.
PTM103100 and PTM103150 provide guidance on the scheme manager’s role when making a transfer and the operation of the overseas transfer charge.
This means that the scheme manager of the ROPS must ensure that their pension scheme continues to meet the requirements to be a QROPS.
Notifying HMRC that the scheme meets the conditions to be a ROPS
Form APSS251 (available from gov.uk), is for use by a scheme manager to provide the required information and notifications.
When making the notification the scheme manager must provide the following information to HMRC:
- the name and address of the scheme and the date it was set up
- the name of the country or territory the scheme is established in (see PTM112200 - country of establishment),
- name, address, contact details and legal status of the scheme manager
- confirmation of whether or not the scheme is regulated in the country in which the scheme is established. If the scheme is regulated the name and address of the regulator and any reference number allocated by that regulator,
- the name and address (and any reference number allocated) of the tax authority for the scheme in the country or territory in which the scheme is established. This is not required if the scheme is set up by an international organisation (see PTM112200 - Schemes set up by an international organisation), and
- confirmation of how the scheme meets the requirements of regulations 2 and 3 SI 2006/206. (Requirements to be an overseas pension scheme - see PTM112200, and requirements to be a recognised overseas pension scheme - see PTM112300.)
On receipt of the APSS251 form, HMRC may ask the scheme manager for more evidence or information. HMRC may then issue the scheme with a QROPS reference number. The QROPS reference is used for administrative purposes by HMRC in its dealings with the scheme and does not provide proof that the scheme meets the requirements to be a recognised overseas pension scheme.
HMRC issues a QROPS reference on the basis of the information that the scheme has provided to HMRC on the form APSS251 stating that it meets the requirements to be a ROPS. If it is later found that there were errors in that information (be it an inaccuracy, error or incorrect presumption) such that the scheme cannot meet the requirements to be a ROPS, then this will be considered to have always been the position - regardless of the issue of the QROPS reference. This will mean that any transfers that have been made to that scheme will not have been recognised transfers.