Gibraltar QROPS tax row may go to court
A financial company is threatening to take the UK taxman to court over a tax row with if QROPS pension providers in Gibraltar are closed down.
Several QROPS providers on the Rock have voluntarily suspended transfers in to their schemes while negotiating with HM Revenue and Customs over the taxman’s interpretation that Gibraltar’s 0% rate of income tax for the over 60’s as a contravention of QROPS rules.
A QROPS - Qualifying Recognised Overseas Pension Scheme - is an offshore pension with tax benefits and flexible investment advantages for people with UK pension rights who now permanently live abroad.
London & Colonial Assurance, a pensions and investment company that does not market a QROPS, is threatening legal action against HMRC and claims two barristers have confirmed HMRC stance is wrong and doubt the EU would back the UK claim.
HMRC is expected to confirm whether Gibraltar will stay on the QROPS list of tax jurisdictions by the end of the month.
Meanwhile, the taxman has made no comment about Gibraltar and refers anyone considering a QROPS transfer to a Gibraltar fund to take independent financial advice.
London & Colonial has just launched a new Gibraltar based SIPP, widely seen as a workaround to take up the slack if Gibraltar is not allowed to offer QROPS schemes.
Currently, Gibraltar providers are on the list of schemes that have notified HMRC that their QROPS meet guidelines - but to join the list a scheme merely has to file notification the QROPS meets the guidelines and HMRC does not verify or approve any notification.
London & Colonial chief executive Ken Wrench said: “It is frustrating that on this matter HMRC will not meet with anybody or explain let alone discuss their objectives.
“One wonders if there is some hidden agenda. Whatever tax is or is not paid by Gibraltar residents will make no difference to the tax paid to HMRC by QROPS members who are UK resident. If it is simply their interpretation of the letter of the regulations then it is about time either that they agree that a favourable interpretation is acceptable or that the regulations were changed.”
