Tax on Irish pension lump sum and income

What would be HMRC approach to the following. A UK resident was previously employed in Ireland and has an Irish defined contribution occupational pension scheme. They left work through ill health some years ago and became of normal pension age earlier this year ( don’t think this affects anything and just for info.) The pension fund received no HMRC tax relief either on the employees or employers contributions. The pension up to 2019 was a QROPS scheme however with the abolition of the UK life time allowance I believe this will no longer have a bearing on how this pension would be taxed - Is that correct. However since this person left their occupation the firm ( well known international organisation) sold off their Irish business and the pension scheme has been wound up. The pension beneficiary contacted HMRC several times about this and received different advice varying from: if they received no tax relief /we are not interested /to everything will be taxed in the UK ,even financial advisors provided different advice. The result has been that the beneficiary has so far not taken this pension because of the uncertainty around it. As the pension scheme has been wound up the trustees were going to transfer the funds into an Irish ROPS buy out bond but this has yet to be confirmed. Under Irish tax rules before the funds can be drawn down they must be transferred to an annuity or what is called an Approved Retirement Fund ( ARF), at that time 25% of the pension pot can be taken as a tax free lump sum and the payments from the ARF are taxed at the normal Irish rates. However as the benificiary is not resident in Ireland, they receive no Irish tax credits - the same as the UK tax free income band. Also Ireland has an additional Universal Service charge (USC) which was introduced during the 2009 financial crisis. The effect of this would be that tax paid on income arising from the ARF would be substantially more than the same tax burden in the UK. The beneficiary is aware of the double taxation treaty between Ireland and the UK and is aware that it is normally the international principle that tax arising on pensions is paid in the country of residence. For Irish income it is possible to get an exclusion order and then the tax is then paid in the UK. However the Irish Revenue commissioners ( RC) equivalent to HMRC do not consider income from an ARF to be pension income and will therefore not grant an exclusion order ( this is clearly laid out in their pensions manual). Therefore occupational pension scheme income via an ARF are paid net of tax which is deducted at source by the ARF provider. There is no other way of getting the pension paid. It is understood that tax credits can be claimed via a tax return but given that this tax is in excess of what would be paid in the UK they would be out of pocket. It appears that this excess payment cannot be used to offset other UK tax even though it is against normal pension taxation practice. The Irish RC have recently introduced a scheme whereby tax can be reclaimed via a form produced by the RC however the process is onerous and requires completion by the beneficiary, detailed financial information from the Qualified fund manager ( QFM) of the ARF. The information required from the QFM is very detailed and looks very complex, the beneficiary doesn’t believe that people will willingly do this. On completion of this form it then has to be further completed by HMRC and stamped, this is to confirm that the beneficiary is non resident in Ireland. So my queries are: Bearing in mind there has been no UK tax relief on contributions how will HMRC tax ( if any) the lump sum and the ARF income. Would the whole of the tax free sum be taxed as normal income or will it form part of the overall lump sum allowance of 25% of £1,073,100 for UK residents? If it forms part of the overall allowance how would any excess be taxed, would it be at normal tax rates or would a penalty be applied? Similarly how will the income from the ARF be taxed ( bear in mind tax will have been deducted at source)? The beneficiary does not believe that HMRC will give up its right to tax pension income and will therefore tax this income and not enable tax credits to be claimed via a tax return. If that is the case this would leave the beneficiary having to pay tax in both countries and then being forced into reclaiming this from the RC. Once completed the form is valid for 5 years but appears to be retrospective ie after taxes have been paid. Are HMRC aware of this anomaly and aware of the reclaim process? Would HMRC even consent to completion of the Irish form and if so how would this be done, can it be done locally or does it need to be posted. If posted then given the time HMRC takes to respond to letters the beneficiary may be out of time. Are HMRC doing anything about the Irish RC position which appears to be in breach of the double taxation agreement and in order to protect the UK tax payer when it asserts its rights.

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