Qrops, is it right for you

The acronym stands for Qualifying Recognised Overseas Pension Scheme, and refers to a type of foreign pension arrangement that has been approved by Her Majesty's Revenue and Customs.

However, HMRC approval does not mean that the schemes are recommended, and choosing a QROPS needs as much care and attention as any other major financial decision. Instead of recommendation, HMRC approval means that the schemes have been authorised as being able to receive UK pension assets free from UK taxes, because they are taxed and regulated as pensions in their own jurisdiction.

Good quality professional advice on the subject is a must, because mistakes can be expensive. For example, if you make a mistake about your tax residence you could face a large tax bill. If you are new to the subject of overseas investment, you may wonder how it is possible to make a mistake about your residence. Surely you either live somewhere or you don't?

HMRC used to abide by the rule that if you spent less than 90 days in the UK you were not resident there. However, since a recent court case the guidelines are more nebulous and instead depend on which country is your "centre of gravity." To avoid a large tax bill, ask your QROPS adviser about your own specific circumstances.

The next potential opportunity for a UK tax bill and perhaps also a penalty would be choosing a scheme that had not been approved. Unfortunately it is not enough to use any scheme in a country that has been authorised to have QROPS. The scheme itself must have been approved. Most approved schemes are on the list that is published on HMRC's website. However, some are not as they wish to remain confidential and are not open to the public. Your adviser should check these details with great care.

Finally, once you have made sure that the scheme that you want to choose has jumped through all the hoops that are necessary to escape the UK taxman, there are the other, standard considerations that apply to pensions to consider. Does the scheme give you the flexibility you need? Does it have the potential to offer the return that you were hoping for?

A experienced QROPS Adviser can make sure that you choose a scheme that is properly authorised, and that your plans and ambitions are suited to having a Qrops.

About the Author

Qrops pension needs proffesional advice and we recomend only speaking with the leading companies