Should expat investors panic over QROPS delistings

Published:  13 Feb at 6 PM
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Speculation over QROPS delistings by HM Revenue and Customs has been clouded in secrecy, with the authority giving no reasons, but there’s no need to panic in most cases.

During 2013, literally dozens of QROPS have been opened and later closed, with HMRC steadfastly refusing to give any reasons for its actions, even although it's fully aware that speculation is the result. However, investors may be pleased to learn that delisting often has a simple explanation.

Most industry professionals prefer to suspect the worst, maybe because it gives them something to talk about at corporate lunches, but in many instances delisting is not a matter of underhand tax fraud or other misdemeanors common in the trade. It can be as simple as unintentional mistakes by the provider or even the HMRC itself.

QROPS rules provide several reasons for the suspension of a scheme and its non-appearance on the fortnightly list published by HMRC. Temporary or permanent closure by its provider, failing to meet HMRC’s qualifying conditions and terms or the death of an investor or his movement or exhausting of the fund are three common reasons.

Another is that the provider and HRMC are investigating a related administrative problem, and the reason which would cause the most concern should it leak out is that the provider of the scheme or even the investor is actually breaking the rules. HMRC has also been known to exclude schemes and even entire jurisdictions by mistake, with a second, revised release in double-quick time seen in the sector as an admission that someone had blundered.

It’s true that many pension insurance professionals dislike QROPS, perhaps due to the fact that when large amounts of cash are involved, people are tempted to break the rules to get their fair share, or perhaps even their unfair share. However, onshore based SIPPS have a much worse reputation, both for tax issues and the sale of unsustainably high-risk investments.
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