An ongoing legal battle between HM Revenue and Customs (HMRC) and the beleaguered investors in Singapore QROPS will go another round after the High Court gave permission for a new legal challenge.
Around 120 investors joined forces to bring a group litigation action against HMRC after the taxman handed them bills for 55% of their pension pot.
The penalty demand is because the investors joined a Singapore-based Qualifying Recognised Overseas Pension Scheme (QROPS) which was later stripped of its QROPS status.
The QROPS involved is the Panthera-run Recognised Overseas Self Invested International Pensions Retirement Trust (Singapore) (ROSIIP).
Now, the legal issue is over those who joined ROSIIP before its status was changed and who claim they were unaware of any potential problems over the scheme’s standing with the tax man.
Tax liability
They claim that because the ROSIIP QROPS was listed by HMRC they had a legitimate expectation that their investment would not attract any tax liability.
The QROPS was created in 2006 in Singapore, but lost status after just two years when HMRC decided the scheme did not meet qualifying rules.
The tax man is claiming that the investors had made unauthorised transfers of their UK pensions into the scheme and as such should face the penalty charge under tax rules.
A trial has been set for June after the High Court gave permission for the challenge
So far, HMRC has won other battles over Singapore QROPS in court.
In the last round, a judge decreed that HMRC should publish a summary of the case and of the judicial review and explain, in detail, the process involved.
Never compliant
HMRC makes clear in that statement that British taxpayers can transfer their pension pot to a qualifying QROPS scheme without incurring a penalty charge on the transfer value of 55%.
However, they say, that despite ROSIIP self-certifying in 2006 that their scheme was compliant with the conditions laid down to become a QROPS, and after they were added to a published list, the scheme was later stripped of its QROPS status.
HMRC says that the ROSIIP was never compliant with QROPS rules, a decision upheld by the Court of Appeal, and all transfers were subsequently unauthorised pension withdrawals and subject to the 55% charge.
The investors are trying to have the scheme reinstated as a QROPS to protect their pension savings.
The High Court hearing will finally decide what is going to happen to those investments and whether they will have to pay the hefty HMRC charges plus interest.
Getting Advice
If you are looking to transfer your UK pension to a QROPS you must seek qualified financial advice.
If you would like to be put in touch with a qualified financial adviser, please contact us via the contact form here for a referral.
