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Special UK legislation applies in certain circumstances to pension payments made on or after 6 April 2011 to non-residents which could be exempt from UK tax under the provisions of a double tax treaty¹. This legislation addressed the potential risk that a UK resident could have obtained HMRC approval to transfer their UK registered pension fund to a qualifying Hong Kong pension scheme and then claim under UK/Hong Kong treaty that their pension payments were taxable only in Hong Kong at lower income tax rates than those which apply in the UK. As the UK legislation only denies treaty exemption where it is considered that the transfer has been made for tax avoidance motives, the UK's 'treaty override' stance is permitted under the OECD guidance on the practical operation of double tax treaties.

The legislation allows the UK authorities to ignore the provisions of a double taxation