QROPS: Warning rule change could increase costs 150%

Proposed legislation designed to prevent the abuse of qualifying recognised overseas pension schemes (QROPS) could increase providers’ costs by 150%, Fairbairns has warned.

In December, Her Majesty's Revenue and Customs (HMRC) proposed a series of changes to the legislation around QROPS.

They included new requirements to report pension events to HMRC, David Higgins, technical director at pension provider Fairbairns said.

Under current rules, QROPS providers had only to report events to HMRC if they took place within five years of a member of their scheme being a UK resident. After five years, the requirement to report back to HMRC lapses.

However, HMRC has now proposed to enforce reporting on events within ten years of the client transferring their money into a QROPS, which Higgins said could increase the cost of QROPS administration by 150%.

He added this cost cannot be absorbed by providers and is likely to be passed on to clients through entry fees.

HMRC's consultation will close on 31 January 2012.