The QROPS industry is counting down to the tax man’s policy statement on the offshore pension.
HM Revenue and Customs was ordered to make the statement to the High Court within 21 days of facing defeat over demanding huge tax payments and penalties from QROPS investors who had put money into the ill-fated Singapore QROPS ROSIIP.
The scheme was closed by HMRC when an inquiry revealed the pension failed to meet QROPS rules.
Despite fighting the ban in the High Court and on appeal, HMRC won the case.
Subsequently, retirement savers who had transferred money to the Singapore QROPS received demands for between 55% and 75% of the funds they transferred from UK pensions to the ROSIIP.
High Court stipulation
More than a hundred of the savers launched a legal challenge against HMRC, which reached the High Court at the end of June 2013.
After a three-day hearing, HMRC admitted defeated, withdrew the tax assessments and told the judge they wanted to withdraw from the action.
However, the judge ruled HMRC could only withdraw if they issued a QROPS policy statement within 21 days – and that time is up in the coming week.
Providers and industry experts are calling on HMRC to take the chance to clarify QROPS rules for retirement savers as they feel they face too much uncertainty.
The latest opponent of the current rules to raise concerns is international consultancy firm Baker Tilly.
The firm has urged retirement savers to consider their actions carefully before transferring a UK pension to a QROPS because of the aggressive and ‘dubious’ way HMRC applies pension rules.
Fines and penalties
“Anyone becoming a permanent expat or international workers from outside the UK with a British pension should think carefully before switching to a QROPS,” said a spokesman.
“QROPS have significant tax advantages, but dealing with the wrong provider or financial centre can lead to massive fines and penalties.
“We recommend anyone in this position should take independent, professional advice from an expert.”
In court, HMRC lawyers admitted a ‘high-level’ review of the QROPS system was underway, but did not reveal what this might entail.
QROPS Group also states “Certainly some QROPS are linked to fraudulent pension liberation schemes, and the Financial Conduct Authority, the UK pension regulator, has warned that once pension funds leave the UK on the advice of an overseas IFA, little can be done to reclaim money or tackle criminal advisers.”