No transfers from UK pension funds to special overseas pensions for expats called QROPS will take place until the HM Revenue and Customs and the QROPS providers in Gibraltar come to an agreement.
The argument is over a 0% income tax charge on pension income for the over 60s.
HMRC says that pension income from QROPS schemes must be taxed and that 0% rate is not a tax.
The Association of Pension Fund Administrators (APFA) in Gibraltar argues that 0% is a tax – similar to zero rate VAT in the UK and 0% corporation tax on the Isle of Man.
HMRC has written to the APFA asking them to clarify the tax issue by September 30 or face possible removal from the list of countries allowed to take UK pension transfers. A response has already been sent by APFA asking for a meeting with HMRC and is awaiting a reply.
“HMRC wrote to us in April about this and we have been in a dialogue with them,” said APFA chairman David Erhardt. “The deadline was the end of August, but we asked for an extension to September 30.
“Since the start of the month, all Gibraltar pension trustees are processing new QROPS applications from clients but will not transfer any money while there is a doubt over Gibraltar QROPS status.
“This is because we do not want to put clients in the position of facing possible tax penalties over unapproved transfers. APFA has consulted some leading UK pension lawyers who agree we are likely to win our case and we are expecting to retain our QROPS status.”
Gibraltar QROPS providers are listed on the HMRC list of companies taking pension transfers published on September 4.
HMRC has refused to comment about Gibraltar QROPS transfers.
“Rumours have flown about for months about Gibraltar losing status as a QROPS jurisdiction,”
Stuart Wilson states, “Anyone considering a QROPS transfer should consider taking independent professional advice from a firm that continuously monitors QROPS schemes, jurisdictions and the latest QROPS events to avoid risking their hard-earned pension pots.”
If an expat with UK pension rights transfers their pension fund to an unapproved overseas scheme, HMRC can charge up to 55% of the transfer value in tax and surcharges as a penalty.
Note to Editors
QROPS – is a ’qualifying recognised overseas pension scheme’
‘overseas pension scheme’ means only people living outside the UK with UK pension rights can invest in the scheme
QROPS Advisor is an independent consumer advisor that monitors the whole of the international QROPS market and gives QROPS advice to individuals around the world
Note: The only other tax jurisdiction to be delisted was Singapore for abusing the QROPS rules
Stuart Wilson can be contacted for comments on: Belgium, Telephone: 0032 (0)2 400 0087, firstname.lastname@example.org
0032 (0)2 400 0087