HM Revenue & Customs has blocked fresh moves by Guernsey QROPS providers to reinstate pensions for retirement savers who do not live on the island.
Guernsey’s director of taxes, Rob Gray, has revealed officials from the Channel Island’s tax office and HMRC have had talks aimed at clearing up problems that led to the axing of 300 pension schemes for offshore residents.
Senior officials met for two-hours to thrash out the issue without any agreement, confirmed Gray.
His view was HMRC did not want to allow Guernsey QROPS to open to retirement savers living off the island, but would green light QROPS for Guernsey residents.
New QROPS rules specifically blocking Guernsey’s S157E QROPS for off-islanders come in to force today (May 23, 2012).
The S157E pension was hastily drafted and passed by the island’s parliament to meet tough new tax rules aimed at halting QROPS tax abuse.
Guernsey was effectively closed to new QROPS business by the deletion of more than 300 QROPS schemes from HMRC’s QROPS list published in April 2012, leaving just three trading.
This was followed by the rules banning S157E pensions.
Pension providers in Guernsey have complained the action singled out the Channel Island’s QROPS and have threatened legal action against HMRC.
Guernsey had reportedly become the world’s largest offshore financial centre offering QROPS pensions to expats and international workers with UK pension rights.
Industry insiders estimate at least one in three of all QROPS transfers out of the UK went to the island.
Guernsey Finance, the trade body for the QROPS providers, also claims up to 200 jobs are at risk if the pensions are lost to the island’s financial institutions.
QROPS is short for qualifying recognised overseas pension, which is a scheme that allows pension funds to be transferred from the UK to one of around 2,600 QROPS in 49 countries.