The four pages of guidance which may be viewed here, appeared this morning on HMRC's website, and were seen as a formal acknowledgement by the Revenue that it would not go after pre-2008 QROPS transfers again, except where there was evidence of dishonesty, abuse, and where "the imposition of relevant tax charges in relation to the transer appears not to be unfair".
The ROSIIP scheme had been such a pre-2008 scheme, having been launched in 2006, the year qualifying recognised overseas pension schemes first enabled British residents to move their pensions out of the UK, if they were living overseas and had no plans to return to live in the UK.
In a statement, HMRC said: "We had made it clear that we would be publishing this guidance. This is our approach to transfers to schemes on the QROPS list where it is later found that the scheme is not a QROPS.
"Most transfers are made to schemes that arte QROPS, so tax charges on an unauthorised transfer will not arise. HMRC's approach to the taxation of transfers will only affect a small number of transfers made in the specific circumstances set out in the note."
Need seen to ensure regulatory conformity
Paul Davies, director of Global QROPS, a UK-based QROPS specialist, said the new guidance contained clarifications that meant that going forward, it was "imperative that an adviser and their client have to ensure the recommended QROPS adheres to the legislation, set down by HMRC, both upon transfer and [beyond]".
"QROPS that either stretch the rules or are unaware of their obligations (in terms of making income, lump sum or death payments to members) could not only see their members' charged on the excesses paid from the fund but – if the schemes have their QROPS status removed – there is more likely to be an unauthorised payment levied on the entire fund," Davies added.
Bethell Codrington, managing director of TMF International Pensions, a division of which was a party in the ROSIIP case, said that in the guidance what HMRC is "effectively saying is that it is up to the client and his/her adviser to individually check whether an overseas pension scheme complies with the requirements to be a QROPS – self certification – and ensure that the scheme continues to comply with those ever changing requirements of HMRC, and continues to comply with their local domestic regulations".
"If there is any failure, HMRC reserve the right to raise and pursue assessments for ‘unauthorised payment charges’," Codrington added.
Although the new guidance notes don't say so, some industry executives said today that they believed the text contained in a box on page one of the guidance may be part if not all of HMRC’s “written post-hearing submission” in the ROSIIP case.
The submission, which has never been made public, had been ordered by the UK high court judge to be submitted by HMRC earlier this summer, after lawyers acting on behalf of the Revenue applied to withdraw HMRC's case against a group of investors in the so-called ROSIIP QROPS, who had challenged HMRC’s earlier decision to delist the scheme and seek charges of up to 55% on their pensions.
One QROPS industry member who did not see today's guidance notes as introducing any major changes to the existing regime was Stephen Ward, of Premier Pension Solutions, a Spain-based adviser. While the guidance appeared to leave the Panthera/ROSIIP investors in the clear, it did not, as he saw it, add to the scheme member, or his or her adviser's, responsibilities to ensure a QROPS scheme they intended to use adhered to HMRC’s conditions to be a QROPS.
As reported here on 21 June, the barrister representing HMRC told a High Court judge in London, after four days of hearings, that her clients sought to withdraw completely from the long-running ROSIIP case, when the ROSIIP scheme's QROPS registration was withdrawn. At that time, it was agreed HMRC would pay all costs on an indemnity basis.
The judge in the case said he would only accept the application to withdraw on the basis that HMRC provided a public statement within 21 days that would effectively be a policy statement which would set out its exact position on QROP schemes.
The ROSIIP case was kicked off in 2011, when a Court of Appeal in the UK ruled that the scheme had never satisfied the criteria needed to qualify as a QROPS. This meant that those in the scheme faced penalties equal to 55% of the total amount they had transferred.
In 2012 the case heated up, as ROSIIP was ruled "not a QROPS", and scheme members began receiving letters from HMRC requesting payment of up to 55% of the amount they had transferred into the scheme. In June that year, a high court in London granted a group litigation order to these scheme members, and in May of this year, the High Court granted the scheme members' lawyers permission to push ahead with the case in court.
Over the years since QROP schemes were introduced by the major changes to UK pension legislation known as A Day, HMRC has changed the wording of the legislation governing these schemes. Since September 2008, it has made clear that the inclusion of a QROP scheme on its list is not evidence that it has been approved by HMRC as a QROPS, but rather, as it says at the beginning of the list, they are "pension schemes that have notified HMRC they meet the conditions to be a [QROPS], and asked to be publicly listed".