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QROPS – All Change From April 2012
With no forewarning new draft regulations associated with QROPS were published by HMRC in December 2011 for consultation. The new rules once finalised are to be introduced with effect from 6 April 2012. The consultation period ended on 31 January. During January there was a flurry of activity as interested parties consulted with each other and professional bodies before submitting their representations.
We understand that it has been suggested by others that the proposed change in legislation re withdrawals from a New Zealand QROPS could be backdated to the date the proposals were announced. This is not the case and in fact the opposite may be true as there are indications that the introduction of the changes may be delayed until after 5 April 2012.
The Finance Bill 2012 draft regulations, the notes and HMRC draft guidance which accompanied it made the UK Government’s intentions very clear and sought comments from interested parties as to whether the revised legislation in the form of the new regulations would meet those policy intentions. Some of the contents of the drafts presented for comment contain errors not least in some of the associated forms and the draft guidance.
There is now the opportunity for the policy division of HMRC to consider the representations made and to lay before Parliament the final version of the new regulations. We understand that it is likely that this will happen during March coming into effect from 6 April 2012. The associated complexities are such that it would not surprise us at all if there were a slight delay in implementation.
By setting out its intentions HMRC has given jurisdictions such as Guernsey and the Isle of Man the opportunity to consider changes to their domestic legislation so that QROPS established in these jurisdictions may continue to operate post 6 April. Guernsey has published its own proposals for domestic law changes. The Guernsey Legislature stands ready to implement those changes if need be once the final UK regulations have been set in stone. We believe that Isle of Man as a jurisdiction is thinking similarly but its proposals are yet to be made public.
The key point here is that those who are currently members of QROPS in Guernsey or Isle of Man need have no cause for concern. Even if in the unlikely event QROPS in those jurisdictions were unable to satisfy the relevant conditions from 6 April it would not matter a great deal. In any event a transfer onto a compliant jurisdiction is normally pretty straightforward.
It is with great irony New Zealand as a jurisdiction is affected the most. One of the major attractions, 100 % encashment will be prevented. However, New Zealand schemes used as a long-term investment vehicle are a beneficiary of the new rules as they meet the requirements without any local legislative changes. In addition, New Zealand schemes will retain much more benefit flexibility than is provided by Guernsey or Isle of Man. For many, New Zealand will remain the most attractive jurisdiction.
Other jurisdictions are soon to enter the market. One in particular intends to make quite an impact. More on that as soon as we are able to reveal it.
More Blogs By Robert Burns BA (Hons), FCCA , Cert PFS
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