Gibraltar QROPS have received a vote of confidence from HM Revenue and Customs after three years of will-they, won’t-they negotiations over accepting UK pension pot transfers.
The Gibraltar Association of Pension Fund Administrators (GAPFA) has revealed a letter from a ‘high-ranking’ HMRC civil servant confirms the UK taxman has no objection to QROPS transfers to the offshore financial centre.
The move marks a shift from HMRC policy, which is against pre-approving QROPS jurisdictions.
Previously, two other financial centres announced they had letters of approval from HMRC for their QROPS – Isle of Man for S50c QROPS and New Zealand QROPS. Besides Guernsey, these were the two financial centres that had the most schemes closed when QROPS regulations were reviewed in April 2012.
New government paved the way
HMRC were asked to comment on the Gibraltar announcement, but declined, saying: “We can’t comment on individual jurisdictions.”
The difficulties between Gibraltar QROPS providers and HMRC started in September 2009, when the providers froze transfers in while negotiations went on over whether 0% was a tax rate for pension payments.
These discussions have finally ended several false dawns as a new government gained power in Gibraltar and appear more willing to shift ground. The result was new QROPS legislation was drafted and passed in Gibraltar in recent months that paved the way for a settlement with HMRC.
However, GAPFA chairman Steven Knight said: “We have been confident that Gibraltar’s schemes for imported pension schemes are fully compliant with the UK’s intention to ensure that the majority of any fund is used solely for providing an income for life in retirement, and this official HMRC endorsement has made worthwhile our past voluntary suspension of activity in this area.”
Rogue QROPS firms not welcome
Knight also indicated that a compulsory code of conduct is being drafted for Gibraltar’s QROPS providers.
“Further changes may become necessary – and the code will be updated regularly – to ensure that members of the public and pensioners can have confidence in Gibraltar-based QROPS being managed to the highest standard possible,” said Knight.
“Non-compliant rogue operators will not be able to use Gibraltar in any way.”
Gibraltar QROPS are restricted to maintaining 70% of transfers in for pension payments in retirement. The pensions will pay out at age 55 years and payments will be taxed at 2.5%.
Transfers out of Gibraltar QROPS will be limited to centres with strict financial regulation.
Well done to the GAPFA and a special well done to Fabian Picardo and his new government for giving high priority to resolving this matter. The previous administration led by Peter Caruana were simply unwilling to give due attention to resolving the matter with HMRC to the detriment of Gibraltar’s finance industry. Well done Chief Minister!