Clearly significant tax-planning opportunities will allow greater tax reliefs via the UK post A-Day regime. Are we correct in assuming that this is part of the reason for new compliance processes?
A. Under the new regime there will be fewer restrictions on the tax-free build-up of rights under a UK registered pension scheme but scheme payments will be subject to new charges intended to recoup excess relief and to prevent payments being made in an unauthorised way. To deter abuse transfers to overseas schemes will be taxed as unauthorised payments unless they are made to a QROPS. Transfers to a QROPS will be potentially liable to a LTA charge, and a subsequent unauthorised payment from a QROPS will give rise to a charge on the same basis as if it had been made from a registered pension scheme. If a QROPS fails to comply with the reporting requirements HMRC can exclude it from being a QROPS.
