QROPs Asset Issues

QROPs Asset Issues

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Non-UK Tax Relieved funds were inadvertently transferred to a QROPS Scheme upon erroneous advice.  As the Non-UK Relieved funds were required by the member it was agreed that first the UK Relieved funds would be transferred to another QROPS scheme therefore freeing the Non-UK Relieved funds to be returned to the member with no unauthorised payment charge.

Although the split of relieved and non-relieved funds was defined, one of the assets was not transferred to the alternative QROPS before the remaining assets were transferred to the member therefore technically resulting in an unauthorised member payment charge.  As the error was administrative in nature;  i.e. it was clearly intended that all UK-relieved assets were removed from the scheme prior to the member transfer HMRC were approached to ask for their confirmation that no member charge would arise.

HMRC advised that a member charge arises if UK relieved funds remain in the QROPS even if this was an error. 

Does anybody have experience of this particular issue, and can maybe assist or suggest ways to deal with HMRC in this matter ?

 

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By marksanderson
09th Sep 2012 21:59

 

 

Hi Chris

The registered pension scheme manual states that:

“It is possible that certain payments might be made by a registered pension scheme that are seemingly unauthorised payments but are not unauthorised payments as the payments are made in genuine error and, once spotted, are rectified as soon as reasonably possible.” (RPSM04104520)

It goes onto say:

“an inadvertent payment made in the following circumstances will not be an unauthorised payment:

·         the payment is made in genuine error, such that there was no intention to make a payment to that extent or at all, and

·         the erroneous payment is spotted by someone involved with the management of the scheme (or the recipient of the payment or the recipient’s adviser might have brought the matter to the attention of the scheme managers), and

·         the error is rectified as soon as reasonably possible.

There is no requirement for the scheme administrator to report a payment made in these circumstances as an unauthorised payment, as the payment is not an unauthorised payment for the purpose of the tax rules relating to registered pension schemes.” (RPSM12101020)

Based on this I would say that you have a case to say that the timing of the repayment of UK-relieved assets was an error in timing and that, once noticed, every reasonable attempt was made to rectify the situation.

I hope this helps but please feel free to email me on [email protected] if you wish to discuss further.

 

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