Members of a failed QROPS may be able to avoid the 55% charge on unauthorized payments.
It emerged today the Beazley Consulting Pension Scheme, sold to British expats in Hong Kong as a Qualifying Recognised Overseas Pension Scheme (QROPS), does not meet HMRC criteria and should never have been classed as such.
For people who invested in the scheme, this could mean a 40% unauthorized payment charge on their savings, plus a 15% surcharge.
However, HRMC has agreed to waive the 15% charge if investors can demonstrate their belief the scheme was a genuine QROPS, and it will even consider appeals against the 40% unauthorized payment charge.
A spokesperson for law firm DLA Piper which is acting on behalf of Beazley says: "The Beazley Consulting Pension Scheme was set up in 2007. At the time Hong Kong lawyers advised that the scheme met HMRC's criteria to qualify as a Qualifying Recognised Overseas Pension Scheme in the UK.
"Appropriate legal advice was taken in Hong Kong before Beazley Consulting submitted its application to HMRC and HMRC accepted that the scheme met its relevant criteria.
"Some 18 months later, after taking its own advice, HMRC decided that the regulations to which the scheme was subject did not meet its criteria and that the scheme no longer qualified as a QROPS.
"This decision also affected other similar schemes. Since then Beazley Consulting has been working closely with HMRC to resolve the issue and has advised members of the best way forward."
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