Judge Tells HMRC To Make Statement On QROPS

By ExpatBriefing.com Editorial 27 June, 2013

HM Revenue and Customs has backed down from a legal case against investors in an overseas pension scheme, abandoning an attempt to charge a 55 percent tax and agreeing to pay all legal costs incurred on an indemnity basis. The presiding judge at the Royal Courts of Justice has instructed the tax authority to make a public statement on its treatment of Qualifying Recognised Overseas Pensions Schemes (QROPS) within 21 days.

QROPS were launched in April 2006, and they are used to transfer a UK taxpayer's pension entitlements to another jurisdiction where he or she is seeking permanent residence, free from tax. HMRC tightened its rules on QROPS during 2012, removing a number of structures from its list of recognised schemes.

The case concerned a Singapore-based scheme called ROSIIP, which was delisted by HMRC following a previous court case in 2012. However, in the latest legal action, the court was told that HMRC had failed to act after it learned why the ROSIIP scheme should not qualify as a QROP, and that it had failed to disclose that, in comparable cases, it had waived the 55 percent charge.

The decision to withdraw was praised by Nigel Green, the founder and chief executive of independent financial advisory organization the deVere Group. Green observed: "HMRC has made the correct and fair decision to abandon this case. It would have been inappropriate to pursue it after individuals were led to believe that this particular QROPS was authorised by the tax authority, subsequently invested in it, only later to discover it had been delisted and taxes of 55 per cent had been applied." He also praised HMRC's efforts to make QROPS rules "increasingly robust and transparent."

The deVere Group handled the transfer of more than 2,000 pensions out of the UK last year. Last month, the organization expressed support for HMRC's 2013 Draft QROPS Regulations. It described them as a "crackdown" that will "help prevent ill advised pension-busting."

Tags: Expatriates | Court | Tax | Pensions | United Kingdom | HM Revenue And Customs (HMRC) | HM Revenue And Customs (HMRC) |

 





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