International: qualifying recognised overseas pension schemes (QROPS): the published list of notifications that a scheme meets the ROPS conditions
Purpose of the published list
When completing form APSS251, the scheme manager indicates whether or not the name of the scheme should be published on gov.uk. The published list is there so scheme administrators of registered pension schemes and overseas pension scheme managers can, as one part of their due diligence, verify that an entity that is on the list has notified HMRC it meets the conditions to be a recognised overseas pension scheme (ROPS).
Every pension scheme that is a qualifying recognised overseas pension scheme (QROPS) must first be a ROPS. A pension scheme is a ROPS if it meets the requirements set out in legislation. This is a factual test.
If the scheme manager of a pension scheme that meets the ROPS requirements wants the scheme to be a QROPS they must notify HMRC that the scheme meets the requirements.
There are two parts to meeting the requirements to be a QROPS:
- the scheme must meet the requirements to be a ROPS (the ROPS requirements) and
- the scheme manager must notify HMRC that the scheme meets the ROPS requirements and undertake to provide information (to HMRC, other pension schemes and individuals) and notify HMRC if it ever ceases to be a ROPS.
The published list shows that the scheme manager has notified HMRC, wishes to appear on the list and has undertaken to provide information (point 2), but this is all it shows. It does not show that the scheme meets the ROPS requirements (point 1). This is capable of changing after notification and must be checked before a transfer is made.
The published list is not intended for use for any other purpose and is not intended to give assurance that HMRC has checked all the information provided for any named scheme. Nor does it guarantee that a transfer made to an entity that appears on the list will be free of UK tax. For a transfer to be made without UK tax charges (aside from any lifetime allowance charge) what matters is whether a pension scheme meets the requirements to be a QROPS. Checking the published list no more than one day before the transfer will confirm whether the scheme has notified HMRC (and met the ‘Q’ of the ‘QROPS’). It will not confirm that the scheme meets the ROPS requirements (the ‘ROPS’ of the ‘QROPS’), which is a matter of fact. Checks to confirm whether a pension scheme meets the ROPS requirements should be carried out as part of an individual’s and scheme administrator’s due diligence when making a transfer.
If an entity appears on the published list but it does not meet the requirements to be a QROPS then UK tax charges will apply to amounts transferred to such a scheme.
The published list is usually updated twice a month by Pension Schemes Services (PSS). An entity’s name will be removed from the published list promptly once HMRC is aware it has ceased to be a ROPS or never met the conditions to be a ROPS. If HMRC has concerns about an entity at any time, its name may be removed from the published list whilst HMRC carries out further checks.
However, before a transfer is made whether the scheme is a ROPS will need to be checked to confirm that a transfer can be made free of UK tax. Scheme administrators and members need to bear in mind that:
- not all entities that have notified HMRC that they meet the conditions to be a ROPS will have chosen to be on the published list,
- the published list is not to be taken as a recommendation for a particular entity or product,
- inclusion on the published list should not be seen as confirmation by HMRC that it has verified all the information supplied by the scheme in its ROPS notification.
- if an entity has been included on the published list in circumstances where it should not have been included because it did not satisfy the conditions to be a ROPS, any transfer that has been made to that entity could give rise to
- an unauthorised payments charge of 40 per cent and an unauthorised payments surcharge of an additional 15 per cent for the member and
- liability to the scheme sanction charge liability for the scheme administrator (see PTM135000).
Considerations for scheme managers - whether to elect to be on the published list
If your entity is on the published list, the scheme administrator will know that your scheme has notified HMRC that it meets the requirements to be a ROPS. If it is not on the list, HMRC can only confirm to them that your scheme has sent such a notification if we have your written permission to do so.
Due to HMRC confidentiality rules, PSS will not be able to answer queries about the overseas entity unless it has received written authorisation from the manager of that entity to disclose this information to a named person. The letter or form providing authorisation must be signed by the manager of the overseas entity in order for PSS to answer the query.
Removal from the published list
There are a number of reasons why an entity might no longer appear on the published list. Due to confidentiality rules, HMRC cannot say why a particular entity is no longer included unless it receives written authorisation from the entity’s scheme manager to divulge information to a named individual.
The following is an overview of the main reasons why an entity may no longer appear on the published list, and of the implications of each scenario on transfers to that entity:
- A scheme manager may have asked for the entity to be removed from the list even though it remains a QROPS. Transfers to the scheme made before and after voluntary removal from the published list may be recognised transfers.
- A scheme that was eligible to be a QROPS when the scheme manager originally notified HMRC that it met the ROPS conditions may have changed status and is no longer a QROPS. For example, the scheme might no longer meet the requirements to be a ROPS or HMRC could have excluded the scheme from being a QROPS (see PTM112500).
- Transfers to the scheme made before withdrawal of its QROPS status should be recognised transfers,
- Transfers made after the date on which the scheme ceased to be a ROPS or it was excluded will not be recognised transfers. These transfers will be unauthorised payments giving rise to an unauthorised payments charge (and possibly an unauthorised payments surcharge) on the member and to a scheme sanction charge on the scheme administrator (see PTM135000).
- HMRC has temporarily removed the entity from the published list, see below headed Temporary suspension of specific entity from the published list.
- HMRC has discovered that the notification that it was a ROPS was incorrect. Transfers will not be recognised transfers because the scheme will not, as a matter of fact, have been a QROPS at any time. They will give rise to an unauthorised payments charge of 40 per cent (and possibly an unauthorised payments surcharge of an additional 15 per cent) on the member and to a scheme sanction charge on the administrator (see PTM135000).
Temporary suspension of specific entity from the published list
HMRC may temporarily remove an entity from the published list in certain circumstances. For example, if HMRC has concerns about its operation or is unable to contact the entity. This will not necessarily mean that the scheme has been excluded by HMRC from being a QROPS, but the entity will be removed from the published list until HMRC has completed its review. Dependent on the circumstances of the case, the outcome of that review could be
- the entity is reinstated to the list,
- the entity is found to not meet the requirements to be a ROPS from a point in time, or
- the entity is excluded from being a QROPS.
The implications for transfers to the scheme will be as set out in the section above headed: Removal from the published list.
Good faith release from scheme sanction charge
Section 268(5) to (10) Finance Act 2004
A transfer from a registered pension scheme to an overseas scheme that is neither a QROPS nor a registered pension scheme will not be a recognised transfer. The transfer will be an unauthorised payment and the scheme administrator of the scheme making the transfer will be liable to the scheme sanction charge.
The scheme administrator may apply to HMRC for discharge of the scheme sanction charge if both the following conditions are met:
- they 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.
This is often referred to as the good faith discharge or release.
If a scheme administrator makes a transfer in the belief that the receiving scheme was a QROPS, but this is not in fact the case they may apply to HMRC to be discharged from the scheme sanction charge (see PTM135400). In making the case the scheme administrator will need to show that they carried out sufficient due diligence checks before making the transfer.
There is no checklist of the actions that constitute due diligence as the requirements will depend on the circumstances of each case. However HMRC would expect due diligence checks to include, but not be restricted to:
- 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.
In addition to keeping a copy of the published list no earlier than 24 hours prior to effecting the transfer, scheme administrators will need to keep all appropriate records as evidence of all the due diligence checks they have undertaken. If a scheme administrator is discharged from the scheme sanction charge there may still be an unauthorised payments charge and liability to the unauthorised payments surcharge for the member.