For anyone who likes watching the taxman squirm, this has been a good week: 122 pension investors who set up 'qualifying recognised overseas pension schemes' (QROPS) in Singapore will be cracking open the champagne. Here's why, and what their latest victory over HM Revenue & Customs means for you.
Firstly, for the uninitiated, what is a QROPS? These date back to 6 April 2006 dubbed A-Day' when some pretty meaty reforms swept through UK work and personal pensions. Among the changes was one that was designed to benefit the thousands of British expatriates either living abroad already, or planning to once they hit retirement age.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The court case that is making headlines now came about when HMRC decided to delist a scheme set up in Singapore called Rosiip that had previously qualified. HMRC argued that inclusion on the qualifying list in 2006 didn't guarantee permanent QROPS status. Having decided that Rosiip no longer met the criteria in May 2008, HMRC wanted to levy a retrospective charge on transfers into the scheme of 55%. In 2011, it looked as though HMRC would get its way when the Court of Appeal ruled that the proposed charge was valid.
Enter High Court judge, Mr Justice Charles, who has just ruled that HMRC's behaviour towards a group of pension investors who appealed that decision has been "shameful" and "aggressive". Among his complaints is the fact HMRC acted too late against Rosiip and appears to have singled them out, having waived the 55% charge on other non-qualifying schemes. He wants a clear policy statement from HMRC within 21 days of how the QROPS qualifying criteria work.
So what does this humiliating verdict for the taxman mean for Britain's estimated 10,000 QROPS investors? The answer for now is a good deal of uncertainty, while they wait for HMRC to respond.
As Geraint Davies, managing director of QROPS specialist Montfort International, told FT Adviser, this verdict could result in a suspension of all transfers overseas if HMRC decides, for example, that all QROPS must be vetted before being admitted. For now any prospective or existing QROPS investors should keep watching this space, and get ready to seek professional advice
-
Klarna IPO: how did the Swedish fintech perform on debut?Klarna’s shares made a fast start following the BNPL company’s New York debut, but momentum waned later on. Should you invest in Klarna shares?
-
The 2% trick – how tiny pension top ups could add thousands to your retirementA third of UK adults have increased their monthly pension contributions beyond the minimum, according to new research, putting them in line for a more comfortable retirement
-
What are wealth taxes and would they work in Britain?The Treasury is short of cash and mulling over how it can get its hands on more money to plug the gap. Could wealth taxes do the trick?
-
When is the self-assessment tax return deadline?If you are self-employed, rent out a property or earn income from savings or investments, you may need to complete a self-assessment tax return. We run through the deadlines you need to know about
-
Child Benefit: how it works, eligibility criteria and how to claimChild Benefit is worth hundreds of pounds per year and claiming it can help build up your state pension entitlement. We look at who is eligible and how to get the payment
-
HMRC warning after scammers target 170k taxpayers – how to stay protectedScammers are using increasingly sophisticated methods to trick people into sharing personal details or paying for fake self assessment tax refunds
-
HMRC rewarded tax informants with £850,000 as record fraud tip-offs sent to taxman last yearThe taxman was tipped off about 164,670 cases of alleged fraud last year, but total rewards given to snoops fell in the 2024/5 tax year.
-
Inheritance tax investigations catch out 1200 more families in HMRC crackdownWhere there is a suspicion inheritance tax has been underpaid, HMRC has extensive powers to check the deceased individual’s financial affairs and chase what is owed. Will you pay more?
-
Do you still have to file a tax return if you don’t owe any tax?Even if you do not owe the taxman any money, failure to complete and submit your tax return could result in a penalty costing you up to £1,600.
-
Tax return: HMRC’s payments on account deadline is approaching – here is why it is unfair for the self-employedSelf-assessment taxpayers have just under a week to pay the latest instalment of their tax return, but is the charge fair? Marc Shoffman explains why this is hurting self-employed people
