In December 2011 the HMRC announced a number of "draft" regulations containing some major changes to the QROPS system, due to come into effect on April 6, 2012. Although released within a "consultation document" it was very clear that consultation was very much a formality. The UK government has indicated that the changes are fundamentally being made to stop QROPS transfers being used to enable, "the payment of amounts that are not allowed under UK rules (in particular, 100% lump sums) once the UK tax rules no longer apply."

In summary, the proposed main changes to the QROPS were to be as follows:

• The QROPS reporting period, within which the fund trustees are required to report to the HMRC any payments to members, will be increased to 10 years after the member transfers out of a UK pension scheme - currently it is a period of five years from when the member became UK non-resident
• Any distribution from a QROPS, within 10 years of the member becoming non-UK resident, must be reported within 60 days for every single payment or transfer
• Potential members will have to lodge an acknowledgement of any "potential adverse tax consequences" with HMRC before they are allowed to transfer.
• The transferring UK pension scheme will have to notify HMRC of any of their members, transferring to a QROPS, within 30 days of the transfer occurring.

Initially, there was no suggestion that the new rules would be retrospective - however, the rules introduced in the UK with effect from April 6, 2012 require an Australian (QROPS) superannuation fund to now report a payment made after April 5, 2012 from a client’s account if:

• the payment takes place within 10 years of the date of transfer into the super fund; or
• the client was a tax resident of the UK at that time the payment was made, or earlier in the UK tax year in which the payment was made;
• or the client was a tax resident of the UK at any time during the 5 UK tax years immediately preceding the UK tax year in which the payment was made.

Importantly, these amended regulations apply to all clients who will, or who have previously transferred monies from a UK pension scheme. Hence, UK authorities have in fact retrospectively amended the conditions applying to the transfer of pensions. The immediate concerns is of course why the requirement for aditional reporting and whether additional taxation will follow? One of the FAQ's issued by the HMRC addresses the question as follows:

Q : Do the changes mean that a UK non-resident will now be subject to UK tax for up to 10 years from 6 April 2012?

A : The tax position of a UK non-resident member of a QROPS has not changed.

Currently, even some weeks after the changes came into effect, there is a considerable uncertainty about the precise impact of the changes - when there is some reasonable clarity we will provide a more detailed summary as soon as practicable. Hopefully that will be possible during the course of May.